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Section 1 Flashcards

1
Q

Explain the importance of strategic implementation

A

1) definition: conversion strategy to detailed plan.
2) 3 elements are equally valid.
3) Interdependence between elements.
4) Need for plan to be delivered.

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2
Q

Evaluate the importance of leadership to strategic success

A

1) key driver
2) motivate & inspired
3) transactions leadership: improve rather than change, focus system control.
4) transformation leadership: recognizes the change and alter vision
5) Change management: overcome resistance
6) empower and clarify the purpose
7) mgt as well as leadership

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3
Q

Analyse the culture web

A 
- Symbol:
Logos, language, dress:
- Power structure:
Who holds the power
- Org structure:
Formal or informal 
- Control system:
KPI, punishment or reward 
- Routine:
  • Stories:
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4
Q

Discuss about Tucker 5 question

A
  • Tucker 5 questions: Profit, Fair, Right, Legal, Environment.
  • Profit: Additional cash flow? Consider contingent cost.
  • Legal: Any legal action arise?
  • Fair: Consider the claim of stakeholders?
  • Right: Consider on different view points (pristine capitalist, expedient, social contract, social ecologist, socialist, feminist, deep ecologist.
  • Environment: Effect on environment.
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5
Q

What is stakeholder claim?

A

the outcome which would benefit the stakeholder.

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6
Q

Explain ethical threat?

A

Any factor may reduce the effectiveness to act in public interest (5 threats: familiar, self-interest, self-review, intimidation, advocacy)

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7
Q

Explain ethical safe-guard?

A

Any measure can prevent the ethical threat.

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8
Q

Explain “public interest” & why audit committee suitable for choosing non-audit service?

A
  • Public interest: collective wellbeing of society as a whole. Accountant must conduct an audit as unbias, true & fair view.
  • Suitability of AC: NED in the AC, responsibility of AC to represent shareholder interest.
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9
Q

Explain “Agency cost” & which might increase agency cost?

A
  • Agency cost: Cost for monitor agent by principal.
  • Problem:
    + Agent attitude toward risk.
    + Lack of NED.
    + Unwillingness to be monitor.
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10
Q

Condition which an institution investor can intervene in a company whose shares its hold?

A
  • Active intervene: follow the step/policies, might increase agency cost.
  • Threat to value of shareholding: strategic risk, operational risk..
  • Fear of mgt fraud.
  • Lack of control system.
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11
Q

Describe essential feature of rule-base?

A
  • Lack of flexibility. (must comply).
  • Visibility: easy to spot out company not comply.
  • Clear rule.
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12
Q

Argument principle-base would be preferable in developing country?

A
  • Overall compliance: P company can focus improvement, R focus on conformance with a set of rule.
  • Lack of resources: R company needs to set up several committee.
  • Varying circumstances: Diff company has a diff growth rate..
  • Local legislation: follow government willingness, may cost to tax payer.
  • International appeal: P investor will be more confident than R local rule-base.
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13
Q

Explain the concept corporate citizen?

A
  • Aim to shaping its core value, with the needs of the society in which business operates.
  • 3 principles:
    + Minimize the harm to society.
    + Maximize any benefit created.
    + Remaining clearly accountable & responsive.
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14
Q

Assess the right, responsibility as a corporate citizen

A
  • Right: exist as legal entity & protected by law.

- Responsible: Comply with law & society norm.

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15
Q

Advantages of adopting IR?

A
  • Decision making: consider many factors.
  • Reputation: decrease reputation risk, more transparent.
  • Harmonization: in business reporting.
  • Communication: additional information to stakeholder.
  • Relationships: Building trust.
  • Accountability: broader perspective means more accountable.
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16
Q

Explain how using IR will provide information about 6 capitals.

A
  • Financial: Fund available (debt/equity).
  • Manufactured: equipment & tool.
  • Intellectual: depend or not on R&D.
  • Human: knowledge, skill. Is work required skilled labor?
  • Natural: resources, environment.
  • Social: relationship with external stakeholder.
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17
Q

Distinguish between rule & principle base?

A
  • R: requires company to comply with regulation. Without complying, company will face legal action.
  • P: Emphasis the objectives, comply or explain.
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18
Q

Explain why need to separate the roles of chairman & CEO?

A
  • Power: unfettered power in 1 person. Express the concerns more effectively.
  • Accountability: CEO is leading the board, Chairman is represent shareholder interest. Reduce conflict of interest.
  • Demand of roles: Both jobs are high workload, need focus.
  • Legislation requirement: Compliance with governance code.
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19
Q

Compare family business w listed company?

A
  • Legal formalities: Listed company will face greater statutory requirement.
  • Formality org: Family company are likely to run informally.
  • Structure: Family company will have no NED and other committee.
  • Objective: Listed company will have varying objectives as it has many stakeholders.
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20
Q

Assess the benefits of induction programme? And requiring CPD for existing executive?

A
  • Better-informed NEDs: understanding about business, markets & strategy.
  • Management & culture: Structure of company, style & culture.
  • Communication w personnel: meeting with other people.
  • Stakeholder relationship: understanding & relationships w stakeholders.
    + Benefit of CPD:
  • Purpose: Extend knowledge & skill, enhance performance.
  • Compliance: Legal requirement.
  • Investor requirement.
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21
Q

Distinguish between unitary & two-tier boards?

A
  • Unitary:
    + Legal responsibility: equal legal responsibility.
    + Decision making: All directors will attend same meeting & have equal information.
  • Two-tier board:
    + Separation of duties: 2 boards: Operational board (run the company), Supervisor board ( legal & regulatory).
    + Responsibility for strategy: Sup board will develop business strategy while executive board will take action.
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22
Q

Characteristics of public sector org?

A
  • Financial: from funder, tax-payer..
  • Objectives: mostly not-for-profit.
  • Performance: may need to public report to local authority.
  • Ownership: local authority or central government.
  • Stakeholder: varying depend on objective.
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23
Q

Explain the roles of a board in public company?

A
  • Ensuring meet local authority’s requirement.
  • Reporting promptly.
  • Being accountability to all stakeholders.
  • Responsibility for how the org running.
  • Budget setting & monitoring.
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24
Q

Explain transparency?

A
  • Transparency: open & clear disclosure, not conceal information.
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25
Q

Explain typical reason why internal control fail?

A
  • Poor judgement: IC depends on the people operating it. IC may fail if the person not understand the process.
  • Collusion between staff: insufficient review process.
  • Mgt over-ride: Senior mgt may be able to control certain activities & staff may lack of the authority to report.
  • Unusual transaction: IC may prevent routine transactions.
  • Deterioration over time: Environment may change over time make the control less effective.
26
Q

Discuss the general qualities of useful information & recommend specific measure which would improve information flow?

A
  • Quality of useful information:
    + Accurate: accurate, complete, unbiased.
    + Cost-beneficial: value of infor need to outweigh the cost.
    + User targeted: User can able to read & understand the infor.
    + Relevant: exclude anything that is not useful.
    + Timely: available when needed.
  • Specific measure:
    + Frequency of report.
    + Greater detail: more information.
    + Physical contact: physical inspection.
27
Q

Analyze the external macro-environment in an electric car sector?

A
  • Political position: any incentive, support green industry, funding green energy..
  • Economic: customer willing to pay premium for electric car?
  • Social factor: does customer has “green attitude”, any trend in social?
  • Technological factor: operating in technology-driven, look for any new technology, replacement.
  • Environment: High level of CO2, trend of green customer..
  • Legal factor: car safety, patent register.
28
Q

Analyze the market place in an electric car sector?

A
  • Substitute products: the petrol, gas vehicle or hybrid car or walking, cycling or bus.
  • New entrant: high capital require, high level of skilled labor.
  • Supplier: can be high, consider switching cost and company is big or not. Labor also can be considered as supplier.
  • Customer: Low as customers are not locked in to a specific company.
  • Competitive rivalry: High, as exit cost is high, company needs to stay
29
Q

Explain “auditor independence” is necessary for auditor-client relationship?

A
  • Reliability of information: key aspect, shareholders need a trusted source of information to judge the agent.
  • Credibility of information: represent the view of independent experts.
  • Value for money of audit work: need sufficient time.
30
Q

Compare & contrast duties & responsibility in the 2 roles as auditor & professional accountant?

A
  • Obedience:
    + Staff: should follow manager’s reasonable orders.
    + Professional accountant: Comply w technical & ethical standard.
  • Interest:
    + Staff: Promote the interest of manager.
    + PA: maintain good name of accountancy body, act honestly & objectivity
  • Obligation:
    + Staff: general duty, be part of the team, org culture.
    + PA: act in accordance w the norms of that body.
31
Q

Discuss the importance of internal audit in a highly regulated industry (ex: water supply)

A
  • Internal audit: is an independent appraisal function, that examine and evaluate the activities.
  • Internal audit in regulated industries:
    + company needs to follow stricter rule, requirement. non-compliance may result in serious impact.-> review & investigate non-compliance area.
    + Information: Regulators require accurate information & reports.
    + Reputation: reduce the reputation risk, build trust in stakeholders.
32
Q

Assess the way audit committee has failed?

A
  • Lack of financial knowledge: requires atleast 1 member to be a financial expert in audit committee.
  • Lack of independent: contain only NED, not previous ED of company.
  • Audit partner: need not to be familiarity threat.
33
Q

Explain why AC is responsible for overseeing the IA function?

A
  • Objective of IA: as AC involve in the process of establishing strategy hence they should be able to ensure IA focus on the area related to strategy.
  • Compliance requirement: AC should ensure IA gives attention to compliance areas.
  • Independent: reporting to AC helps to maintain the independent of IA as no ED involve. No self-interest in AC.
  • Authority: Giving the IA more power to enforce demand tasks.
34
Q

Discuss how effective IC can provide assurance on the integrity of FS?

A
  • Importance of FS: shareholder reply on FS to make decision. IA provides assurance to shareholders about information.
  • Information system: Ensure company produce timely, relevant and reliable information.
  • Personnel: Control ensure accountability for key tasks as it has been segregation of duties.
  • Audit trail: Provide audit trail for audit, analyse the reliability and correctness of information.
35
Q

Develop a decision tree & discuss its implications and shortcomings?

A
  • Decision tree: address each possibility choice, need subtract the cost from the benefit to calculate EV.
  • Implication:
    + Decision tree only based on information at that point of time.
    + Base on probabilities determined in the workshop not an actual past data.
    + The predicted value may not accurate.
    +
36
Q

Discuss what other factor should taken into consideration when using decision tree?

A

+ Intangible benefit: such as user’s experience, friendly environment.
+ Risk assessment: Big and long established vendor might less risk.
+ The impact on org: consider the impact with the value of company.
+ Effective selection procedure: should consider all aspect of product.

37
Q

Background: manufactured electrical goods, specific to each customers, sales to large company, overseas companies entering, customers want lower prices. Sale qty higher than budget but less revenue and higher cost.
Question: Possible reason why performance is low?

A
  • Sales quantity increase as the result of price drop, sale staff commission base on volume.
  • Material: higher as using short lead time vendor, new technology makes the material more expensive.
  • Direct labor: high volume means need to overtime. Product specifications so need to work on each model, no learning curve earned.
  • Overhead: Using traditional absorption costing makes mgt not up-to-date information.
38
Q
  • Background: Prepare car broke-down, annual membership fee, provide service everywhere, assistance eng located all over the country, if he cant fix, bring the vehicle back to home address FOC.
    + offer insurance, vehicle history check, advice center.
    + purchase and maintain vehicles at central garage. Garage at town, no expansion.
    + Now lease vehicle from Autodirect.
    + Attendance of repair staff at breakdown.
    + Membership renewal
    + Vehicle insurance services.
    + Membership queries.
    + Vehicle history check.
  • Question: Outsource or inhouse and identify technological implication & opportunity?
A
  • Decision for out-in use Harmon process matrix (consider strategic & Complexity).
  • Attendance at breakdown: Inhouse:
    + Strategic: important of 3C’s processes.
    + Complexity: Eng may face complicated cases. need maintain the capability of eng.
    + Tech: given laptop so that Eng can access data base all the complicated cases.
  • Membership renewal: Inhouse
    + Strategic: main revenue so that important.
    + Complexity: Straightforward process, should be automated.
    +Tech: Using system so that automatically renew the membership of customers unless they want to cancel.
  • Vehicle insurance service: Outsource
    + Strategic: just additional service 3C provided.
    + Complexity: Need risk assessment for each customers therefore very complicated process. Subject to insurance law.
    + Should outsource to specialist’s company.
  • Membership queries: inhouse
    + Strategic: Very important, as this affect customer satisfactions.
    + Complexity: Vary to each cases, therefore need well-trained staffs.
    Can consider to bring the call center to lower labor cost area.
    + Tech: Should prepare the FAQ on their website.
  • Vehicle History check: Outsource.
    + Strategic: not important to 3C goal.
    + Complexity: Requires database to compare the vehicle identity.
39
Q

3C case.

Analyze the advantages that 3C will gain when outsource the purchase and maintenance vehicles?

A
  • Economic of scale: Outsource to specialist company will reduce the cost. (outsource fee < inhouse cost) consider to see the scale of company.
  • Quicker service: Outsource company has many centers all the country whereas 3C has only 1 central garage.
  • Easier budget: outsource cost can be determined easier than conduct by themselves.
  • Reduce capital requirement: Reduce space needed.
  • Reduce overhead cost: Can reduce the number of staffs/
40
Q

FINCH Co.
- Background: Grocery, reputation as selling quality, small player, has loyal customers & staffs.
+ Limit use of IT, ordering inventory manually.
+ New checkout system: Customer scan & pay, staffs have not train.
+ Click & collect: Order online and pick up at store.
+ Post implementation: increase complaint, staffs dont know what to do, customer move out, high volume of online order than expected.
- Question: Assess which new process & system are necessary to help remain competitive.

A
  • Competitive position: Ensure that company respond to opportunities and threats.
  • Competitor: As Rival company has introduced new technologies development, Fin position could be weakened. However, new process will only benefit if they provide value to customer.
  • Changed in shopping behaviour: Customer now wants to shopping online and also need reduce time spend at store.
  • Customer requirement: As behaviour changed, introduced the click & collect would be benefit to customer.
41
Q

FINCH Co
- Evaluate the different aspects if org change highlighted in four view model have contributed to the failure of new systems?

A
  • Four views model (POPIT):
  • People:
    + Lack of experience: Project committee has no prior experience. Also the IT function may not has capability to handle new system.
    + Lack of staff training: The committee has underestimate training section. When issue happens, staff has no exp to solve. Increase complaint, lost sale.
    + Lack of contingency: Immediate redundant loyal staffs while not have sufficient staffs to support customer.
  • Process:
    + Lack of communication: not properly introduce to customer, may need to train staffs.
    + Limited used of expertise: consider the project complexity, Finch may not have enough skilled staffs in IT function.
  • Organisational context:
    + Senior mgt support: Staffs used to work as traditional way, now move to new tech but the CEO wants staffs to learn on job -> impractical.
    + Confusion over responsibility: Staff need to have clear task delegated from mgt. Need supervisor to oversee the process.
  • Tech:
    + New tech development can have generate real time report. support decision making.
42
Q

Pharmacy System International
- Background: Selling medicine. Provide software for retail pharmacy, Over last 3 years, revenue, market share growth.
+ CEO wants to sell package to general retail industry, Sale director ok, Software director disagree
+ Lack of staffs in Software function. Also salesmen sold customized product so take time to develop and fix.
+ criticized by customers.
- Question: Analyze the nature, scope & type of this change?

A
  • Prefer to Balogun & Hop Hailey’s matrix: Adaption, Reconstruction, Evolution, Revolution.
  • PSI used to run in niche market, only sold to pharmacy market, now PSI wants to sold to general market, meaning diversify of its product -> Diversification strategy.
  • Nature of change: Incremental builds up in existing method. Big Bang involves major change on processes, cultures. Therefore, introduce a new product means one-off challenge -> Big bang.
  • Scope of change: which activities or function need changing. Realignment change on existing model. Transformational is radical change to the model.
  • Type of change:
    + Adaption: Existing model is retained. CEO may view it’s a adaption but software director considers it’s major change.
    + Reconstruction: significant, rapid change however does not involve change to business model.
    + Evolution: Incremental process lead to new business model. PSI is evolution: PSI wants to expand not due to crisis and require more time.
    + Revolution: Rapid & Wide-ranging change response to extreme pressure.
43
Q

Pharmacy System International.
Identify & Analyze using appropriate model, the internal contextual features that could influence the success or failures of change?

A
  • Contextual features: Time, Scope, Preservation, Diversity, Capability, Capacity, Readiness, Power.
  • Time: need to rush or not, development time (need more time for software function), CEO expectation wants to introduce quickly.
  • Scope: Evolution. Change in marketing mix: enter new market.
  • Preservation: Retain key staffs: if shortage of staffs will affect to the project. Senior mgt support: Persuade Software director agree with the plan.
  • Diversity: Diversity of experience: PSI follows only 1 strategy for long time therefore current not support the CEO. Diversity of expectation: Goal of sale team and software team is conflicting, need alignment.
  • Capability: Capability to manage change: need to convince everyone about the change or else it’s likely to fail. Past experience: if in the past they did the same things therefore it’s more chance to success.
  • Capacity: People: enough staffs or not. Funding: Capital or debt.
  • Readiness: Software director wants to improve existing customer -> not ready for change.
  • Power: CEO may have the dominant power but in this project it’s likely the software director.
44
Q

Institution Analytical Accountants

Question: Identify a range of redesign opt for improving question handling process, evaluate the benefits?

A
  • Identify problem -> option to overcome -> benefit.
  • Redesign:
    + Bottleneck at entering question.
    + Consequence: cant found the question in data bank, delay time, input mistake.
    + Opt: Employ more staffs, Enter question when accepted.

+ Too many layers.
+ Delays & increase waiting time.
+ Raising reject, accept note can be automated. or can shift the input to education dept.

  • Re-engineering:
    + Author enters the question -> reduce staff cost, increase accuracy.
45
Q

Brighttown

  • Background: Mayor wants to change traffic light.
  • Question: Discuss what changes will have to be made to the “term of reference” to reflect the new vision of project?
A
  • Initial document:
    + Objective & scope: Initial project propose to reduce traffic congestion and new mayor wants to propose public transport.
    + Project sponsor: Change from former mayor to new mayor.
    + Project scope: Change from internally (only need change the time of traffic light) to wider aspects, change car parking area, invest buses…..
46
Q

Brighttown
- Background: Some benefits:
+ Financial: will save $90K staff cost.
+ Quantifiable: may be financial or non-financial, not accurate as financial benefit. Ex: electric, gas saving..
+ Measurable: only obtain post-implementation.
+ Observable: set on some criteria, usually non-financial.
New mayor want traffic light priority for bus and invest heavily on bus. Sell car parks $325K reduce 1000 to 800 car spaces. parking fee from 3 to 4, car park occupancy 95%.
- Question: Identify cost & benefits for the revised project. Classifying each benefit using the guidance.

A
  • Selling the car park: $325k - financial
  • Increase bus ticket: Measurable as only quantify after implement project.
  • Increase parking revenue: increase from 1000395% to 800495%. Quantifiable.
  • Reduce emissions: Measurable.
  • Improve reputation and attract investment. Observable.
  • Cost: Cost of buses. overhead cost (staff, electric…) disposal car park cost.
47
Q

P&J
Background: Mining company, Product X32 main sales. Supporting local communication. Found out X32 harmful. Cant refit all the operation just do partial and no changes for X32.
- Question: Draft a short article on magazine: Distinguish between strategic & operational risk and explain why X32 harmful is a strategic risk?

A
  • Need title, introduction and conclusion.
  • Operation risk: arise when business carries daily activities which might not go as the plan.
  • Strategic risk: relate to the fundamental decision of direction. If strategic risks materialize, cause affect the industry also.
  • X32 is strategic risk: bank may not funding, shareholders will sell their shares, customers change product, employees leave.
48
Q

Alpha software
Background: Software for accountant.
+ Turbulent times: change in mgt. Last CEO want to cut cost, reduce training budget.
+ Future direction: want to be market leader. Use integrated report.
- Question: Explain how IR help Alpha to communicate its strategy to shareholders and improve its strategic performance?

A
  • Benefit of IR:
    + Reduce confusion among stakeholders: Change in senior mgt & policy led to confusion. they are likely to sell their shares.
    + Communicating strategy: IR has detail mission, value, nature of business.
    + Resource allocation: How mgt use the resources for mid, long-term. how they investing in training, and turnover rate.
    + KPI: set the KPI to each department, not only financial but also non-financial.
    + Improving long-term performance: Consider the link between activities, better control the performance.
49
Q

Machine Shop
- Background: sell small electrical machines. 65% are domestic customers. Open 2 stores per month. No direct competitor.
Ceeland: Good transportation. Low fuel, road taxes. good network, as Machineshop needs network for online ordering.
- Question: Prepare 3 slides with notes. Explain the principle of Porter diamond, and use to describe the attractiveness of Ceeland & Arboria?

A 
- Slide 1: Porter diamond model:
\+ Purpose of model.
\+ 4 elements:
Factor condition.
Demand condition.
Supporting industries.
Firm strategy, Structure, Rivalry.
Note: Use for national competitive. 
- Slide 2: 
Factor condition:
> Basic factor.
> Advance factor.
> Developments in Ceeland.
Demand conditions:
> Level of demand.
> Consumer characteristics.
> Home market vs oversea market.
> Demand in ceeland.
Note: Basic is unskill labor and natural, advance: skilled, infrastructure, tech. Ceeland has good transport and communication network.
Demand: level of customers, as in Arboria has high demand so MS has well positioned to enter Ceeland.
- Slide 3:
Supporting industries:
> Co-operate and co-ordinate.
> Success in related industry.
Firm strategy, rivalry.
> Development rate.
Note: Stock product in Ceeland -> good support.
Strategy, rivalry: Lack of competitor.
50
Q

Rock Bottom
- Background:
+ Phase 1: Start at small company, specialist in product. Rick enjoyed unconventional & the same to managers. Reward to staff by salaries, bonus.
+ Phase 2: Profit decline, public the company. Most managers left. Rick has huge bonus and benefits but need public.
+ Phase 3: Rick bought all the shares. New managers didn’t like his style. Sales not catch up with customers. Fail.
- Question: Evaluate leadership style contributed to the success and failure of each phase?

A
  • Phase 1: Introduction & Growth:
    + Offer imported new products -> introduction, growth phase as revenue increase.
    + Leadership: He was a charismatic leader and entrepreneur. Has vision, encourage staffs. And staffs have well rewarded.
  • Phase 2: Maturity:
    + Competitor enter so revenue drop.
    + Rick floated the company. Under pressure to provide more information.
    + As the change the structure (more tight) -> many left.
    + Leadership: Rick has failed, he not adopted right skill for maturity phase. Focus on personal activities than shareholder.
  • Phase 3: Decline:
    + Technology improve but RB still offer same product.
    + RB still run retailer without develop online service. Higher cost. Less competitive.
    + Managers not familiar with his style. Rick bought back all the shares to make company private.
51
Q

ATD
- Background: sales manager wrong forecast, increase sale.
+ CEO cut cost.
+ manager left, feel powerless, and undervalued.
- Question: Explain how introducing formal budgeting process would address the problem?

A
  • Accountability: set realistic target. Place a accountability on function manager. Take corrective action. Motivation.
  • Flexed budget: help to assess performance correctly. More accurate KPI. Goal congruence
  • Cost cutting: Know where to cut cost.
52
Q

PULPO

  • Background: Paper company. Provided data to parent company for environment report.
  • Question: Explain the argument in favor now publishing on environmental report?
A
  • Currently giving data to parent company therefore the cost to prepare environment report is low.
  • Increase transparency and building trust with local residents.
  • Report shows the input, process, and output including waste help to explain the smell and water pollution.
  • Increase reputation. Gain support from local community.
53
Q

MARY JANE:
- Background: Ferry operation. Long-established company. Design weakness: not possible to check whether all doors closed or not.
+ Had an accident. Each person assume the other had checked. Captain assumed all was well if didnt hear anything.
+ Mistake on loading, pressure to captain to leave asap so higher speed.
+Insurance not cover all the fines.
+ Had a report from consultant advice to change the structure but not passed to appropriate staffs.
- Question: Analyse the IC failures at Sea ship Co and Mary Jane and the reason for them?

A
  • Introduction about IC: ensuring operational effectiveness, reliable systems, compliance.
  • Design fault: highlighted by consultant but not acted due to communication. -> serious failure as no understand the responsibility.
  • Loading problem: Well-trained staff & physical control should have been implemented.
  • Failure to secure the door: The checking is inadequate. no formal requirement for checking, confusion on responsibility.
  • Reporting system: Reporting by exception.
  • Emphasis on speed: No tracking speed limit.
  • Failure to insure: Legal dept not review the insurance arrangement.
54
Q

The BA Times

  • Background: Magazine industry. Office & factory are leased. Falling in revenue, high distribution cost. Younger changing habit, less read printed media. Advertisers drop.
  • Question: Analyze the effect of any potential technology or media change on subscriber, advertiser and the financial viability of his company?
A
  • Diver for change: Changing habit & higher operating cost led to the need for change.
  • Barriers to change: Victor is old-fashioned attitude need to overcome his decision.
  • Impact on key stakeholders:
    + Subscribers: Attract more viewers. Tailor online contents. Free articles. Reading everywhere.
    + Advertisers: Hyperlink to their website, target customer, collect data.
    + Financial viability: Reduced printed cost also printed revenue. Need more investment on the development changing.
55
Q

Graffoff
- Background: Share funded by saving, sole shareholder. Emily takes a significant dividend each year and wish that continue. AR been delay and AP has promptly payment.
+ Normal customer credit is 30 days. Average for payable is 40 days.
+ BS: AR-260, AP-75
+ PL: Revenue-1,600. COGS-1,375
- Question: Analyze whether Graffoff can expand organically at a cost of $500K?

A
  • As Emily wants to keep the dividend therefore the source only come from credit control.
  • Tighter credit control: Average payment of customers is 59d. If tighten up to 30d will have saving 128.5K or around standard 40d will save 84.5K.
  • Delayed payment: Average take 20d to pay vendor. Increase to 40d would save 75.5K.
  • > Conclusion.
  • Debt factoring: Third party takes over the debt and will pay 80% of AR in advance.
56
Q

Yvern Trinkets
- Background: Consumers prefer to buy products which have been produced in the region.
+ Have 4 products: A,B,C,D. New director wants follow cost leadership, outsource 4 products. Only product A, C has lower outsource price.
+ He assumes this will save 16K fixed cost.
- Question: Evaluate the claim that “all 4 products can be produced more cheaply by outsource” and discuss the issues raised by outsourcing the products?

A
  • If A, C outsource, YT will have spare capacity. There is no indicators show that demand of B, D is higher and the constraint on production capacity.
    + Outsource C due to the fixed cost, as variable cost < outsource cost -> consider the accuracy of fixed cost data.
  • Qualitative factors: no exp in managing outsourced contract. Need to see the terms.
    + Marketing itself as producing locally. If outsourced, will invalid this message.
    + Consider the labour, lower capacity means layoff.
  • Summary.
57
Q

Coastal Oil
- Background: Joint venture in many places. Due to JV, Coastal Oil does not have direct influence over some important control.
+ Accident: Failure of 1 staff from Well Services, a minor partner. Exceptional report on risk.
- Question: Prepare a statement for Mrs Ahmend that argues again Senator that Mrs Ahmend “should have known this was gonna happen” and explains why Coastal Oil cant guarantee the prevention using the ALARP principle?

A
  • Statement to special committee: didnt have full control. However need to clear the agreement.
    + Risk assessment is complex process that involve both the likelihood and the impact of risk.
    + Objective risk: high accurate on measuring risk. Subjective risk: using judgement to assess.
  • Subjective assessment of accident: Must use judgement to determine the risk therefore uncertainty.
  • Lack of info: Information system is inappropriate. Report by exceptional mean the higher level may miss important point of control.
  • Impossible to eliminating risk: risk cant be reduce to zero. Human errors. Cost vs the benefit.
  • ALARP: if risk is high, the control will reduce the likelihood and impact. For example: training staff, safety equipment.
  • Judgement: Subjective risk depend on judgement mean the experience, risk attitude..
58
Q

Jones Co
- Background: As an accountant in audit firm. Audit Miller. Found unusual transaction about security system in Martin’s house (Director).
+ Potto-Partner said that he would ask but end up with no matter issue.
- Question: Criticize Potto ethical & professional behaviour?

A
  • Agreeing for corruption: Potto has agreed for Miller to charge the personal cost to company report.
  • Duty to shareholders: allow his relationship override shareholder’s interest.
  • Duty to tax authorities: Tax evasion
  • Duty to professional colleagues: not conduct the query about the expense.
  • Failure to fulfill accounting standard: Close relationship with Director client but not disclose.
59
Q

Rosey & Atkins
- Background: R&A wants to build a low-cost housing.
+ Local government considers to grant permission. Local authority has shares in R&A and also invest in R&A fund.
+ University doesn’t want the building. Own a little shares in R&A.
- Question: a) Explain how stakeholder claims are sometimes in conflict.
b) Using suitable framework, assess the competing claims of the local government and University?

A

a)
- What is stakeholder claim: Some want influence what org does, some concerns that they are affected.
+ Stakeholder claims are the outcome benefit to specific stakeholder. Refer to the case.
b)
- We can use Mendelow matrix to assess the power and interest of each stakeholders. The matrix has drawn back that can not easily determine how much power & interest of each stakeholder.
- Local government: Has high power as ability to grant permission and as the investor/shareholder can influence the decision making process.
- University: Less power cuz no statutory control.
-> Conclusion: should balance the claim of stakeholder.

60
Q

iTTrain
- Background: Training course provider, aim to premium quality.
+ Lecture cost: $450/day. Room $250/day, lunch $10/delegate/day. Printing cost $20/delegate.
+ Next year will have 40 courses. Min 3 delegates and max 9 delegates.
+ Fix cost $65K/year.
+ AQT the biggest rival, offer $900 and discount 10%.
- Question: a) Evaluate suggestion price $750, and est level of contribution next year.
b) Describe possible options for Marco in pricing courses?

A
  • Evaluate price:
    + Marketing objective: Pricing is base on customer perception.
    + AQT, dominant provider offers $900 and discount to $810 -> $750 is a reasonable price (lower price and high standard.
    + Financial: Calculate all the possible options from 3 to 9 delegates. As the result iTTrain need to maintain 6 delegates over 40 course to have a profit.
  • Pricing options:
    + Increase price: Increase to $800, still lower than AQT.
    + Use of intermediaries: A feature of market is that intermediaries play as supply chain. However iTTrain must discount 10% therefore cant afford to the cost.
    + Decrease cost: Try to reduce operation cost such as full employed lecture and payment for full month. Long-term contract with room provider.
61
Q

Tillo Community Center
- Background: Current building inefficient cost 12K/month.
+ Move to new building and have benefits:
+ Rental saving, Energy saving, Increase income, Better staff morale.
- Question: Draft a analysis on behalf of PAA that formally categories and critically evaluates each four sets of proposed benefits?

A
  • Observable benefit: only determine judgement, experience. Increase morale should be here. Many factors influence this. Should not include in business case.
  • Measurable benefit: Increase income. Difficult to quantify. not certainty. More information needed to back up the data.
  • Quantifiable benefit: Energy saving. Possible to quantify. But actual saving only known when operating.
  • Financial benefit: rental saving. Can be use financial formula to calculate

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