SBL Mock Test 2020-21 PDF
| Title | SBL Mock Test 2020-21 |
|---|---|
| Author | Akash Doshi |
| Course | Strategic Business Leadership (SBL) |
| Institution | Association of Chartered Certified Accountants |
| Pages | 22 |
| File Size | 489.2 KB |
| File Type | |
| Total Downloads | 13 |
| Total Views | 727 |
Summary
ACCA MOCK A – DOLLY VARDENStrategic Business LeaderSeptember 2019 to June 2020Kaplan Publishing/Kaplan FinancialSBLTime allowedWriting time: 4 hoursAll questions are compulsory and MUST be attemptedDo NOT open this paper until instructed by the supervisor.This question paper ...
Description
ACCAMOCKA–DOLLYVARDEN
StrategicBusinessLeader
SBL
September2019toJune2020
Timeallowed Writingtime: 4hours AllquestionsarecompulsoryandMUSTbeattempted DoNOTopenthispaperuntilinstructedbythesupervisor.
Thisquestionpapermustnotberemovedfromtheexaminationhall.
KaplanPublishing/KaplanFinancial
ACCA SBL:STR ATE GIC B U SIN E SSL E AD E R
©KaplanFinancialLimited,2019 Thetextinthismaterialand anyothersmadeavailableby any KaplanGroup companydoesnot amounttoadviceonaparticularmatterandshouldnotbetakenas such.Noreliance shouldbe placedonthecontentasthebasisforanyinvestment orotherdecision orinconnectionwithany advice given to third parties. Please consult your appropriate professional adviser as necessary. KaplanPublishingLimited andallother Kaplangroupcompaniesexpresslydisclaimallliabilityto any person in respect of any losses or other claims, whether direct, indirect, incidental, and consequentialorotherwisearisinginrelationtotheuseofsuchmaterials. All rightsreserved.Nopartofthisexaminationmaybereproduced or transmittedinanyformor byanymeans,electronicormechanical,includingphotocopying,recording,orbyanyinformation storageandretrievalsystem,withoutpriorpermissionfromKaplanPublishing.
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K AP L ANP U B L ISH IN G
MOCK E X AMA QU E STIONS
DOLLYVARDENLTD Introduction Assumethat'now'isJune2018. DollyVardenLtdisalarge,family‐owned,foodmanufacturer.ItisbasedinNorthland,aEuropean countrythatisamemberoftheEuropeanUnionbutnottheEurozone(thecurrencyofNorthland istheN$).NorthlandhasaCorporateGovernanceregime very similartothatof the UK, anduses IFRS(asadoptedintheEuropeanUnion). Following a period of unsatisfactory performance, the previous CEO (a family member) has retired.AnewCEOhasbeenbroughtinfromoutsidethecompany,andtaskedwithrestoringthe company’sperformance.Thisisthefirsttimeinthecompany’shistorythatan‘outsider’hasbeen brought in to run the business, as every previous chief executive has been a Varden family descendant. Thefollowinginformationisprovided: Exhibit1 Exhibit2
Companyhistory EthicalCode
Exhibit3 Exhibit4 Exhibit5
Industryfactsheet LetterfromStaggLtd Financialstatementsandotherinformation–StaggLtd
Exhibit5
FinancialandManagementinformation–DollyVardenLtd
Thecaserequirementsaregivenbelow:
1
YouareaSpecialProjectsAssistanttothenewCEOofDollyVarden.
The CEO has expressed her desire topursue growthin revenues, in orderto make it easier toincreaseprofits.ShebelievesthatDolly Vardenwill struggle tosurviveunlessit regains marketshareandexploitssignificanteconomiesofscale. Required: As Special Projects Assistant to the new CEO of Dolly Varden, you have been asked to produceaconfidentialreporttotheCEO,which: (a)
Discusseshow thecultureof DollyVarden mighthaveaffecteditshistoricalgrowth anddevelopment.Youshouldrefertoanappropriatetheoreticalmodel. (8marks)
Professionalskills marks are available for demonstrating scepticism skills in probing theinformationprovided. (2marks)
(b)
Evaluates the extent to which the Ethical Code of Dolly Varden might restrict opportunitiesforfuturegrowth. (8marks)
Professional skills marks are available for demonstrating scepticism skills in challengingtheinformationprovided. (2marks)
K AP L ANP U B L ISH IN G
(20marks)
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ACCA SBL:STR ATE GIC B U SIN E SSL E AD E R
2
YouareaSpecialProjectsAssistanttothenewCEOofDollyVarden.
Havingdiscussedyour firstreport withtheCEO, shehasaskedyouto helphertopersuade therestoftheBoardoftheneed,andoptions,forgrowth.
The CEO has passed you a letter, and some supporting information, received from Stagg GroupLtd.Shebelievesthatthismayproveuseful. Required: AsSpecialProjectsAssistanttotheCEO,youhavebeenaskedto produceareporttothe BoardofDollyVarden,which: (a)
Evaluates and assesses a range of general strategic options which Dolly Varden might consider, if it wishes to pursue a growth strategy. You should refer to an appropriatetheoreticalmodel. (12marks)
Professional skills marks are available for demonstrating evaluation skills in your assessmentoftheoptionsavailable. (3marks)
(b)
Discusses a range of possible valuations for Stagg Group Ltd, and indicates what levelofcashofferyoufeelthecurrentownersmightaccept. (12marks)
Professionalskills marks are available for demonstrating commercial acumen skills in usingyourjudgement. (3marks)
(30marks)
3
YouareTreasuryManagerofDollyVarden.
AftertherecentBoardmeeting,atwhichthefindingsregarding Staggwerepresented, the CEOofDollyVardenhasforsomethoughttobegiven to howtheacquisition ofStaggLtd mightbefinanced,iftheBoardchosetoproceed. Required:
As Treasury Manager of Dolly Varden, you have been asked to produce a confidential report to the CEO, which assesses the suitability, feasibility and acceptability of alternativesourcesoffinanceavailabletoDollyVarden,ifitwishestoacquireStagg.
Professional skills marks are available for demonstrating analysis skills in considering the informationprovided. (4marks)
(18marks)
(22marks)
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K AP L ANP U B L ISH IN G
MOCK E X AMA QU E STIONS
4
YouareCompanySecretaryofDollyVarden.
TheCEOhasproposed,totheBoard,thatDollyVarden shouldseriouslyconsideracquiring Stagg.TheBoardmembershavediscussedstrategicfit,valuationandfinancing.
Some of them are very nervous about the impact of refinancing at such a level, and are askingquestionsaboutequityfinance. Required: As Company Secretary of Dolly Varden, you have been asked to prepare a slide presentation(slidecontentandnotes)forthenextBoardmeeting,which: (a)
(i)
outlinesthemainmethodsDollyVardenmightusetoraisesignificantequity funding,and
(ii)
compares and contrasts the role and influence of an institutional investor withthatofaprivateequityinvestor. (14marks)
Professionalskills marks are available for commercialacumen skills in demonstrating yourawarenessoftheexternalfactorsinthefinancingdecision. (4marks)
(b)
Advises how corporate governance at Dolly Varden would have to change, if it weretouseapublicequityissuetofundthepurchaseofStagg. (8marks)
Professional skills marks are available for demonstrating communication skills in persuadingtheBoard. (2marks)
Note:Youshouldlimityourpresentationtonomorethantenslides,forthewholeofthis requirement. (28marks)
K AP L ANP U B L ISH IN G
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ACCA SBL: STR ATE GIC B U SIN E SS L E AD E R
EXHIBIT1 Companyhistory (Takenfrom‘GreatNorthlandBusinesses’bySirJohnChester.NorthlandPress,2012)
Isobel‘Dolly’Varden,1897‐1968 DollyVardenLtd Unlike many companies named after ‘quaint’ characters, there really was a Dolly Varden. And whataformidableladyshewas. Bornjustbeforetheendof thenineteenthcentury,Isobel‘Dolly’Milnerwas thethirdofseven childrentobeborn totheReverendFrancisMilnerandhiswife Alice.Asasmallchild,Dollylived with herfamilyinthe quietruralsettingofFairleigh, onthebanks oftheRiverWash. Her Father wasMinisterofthelocalchurch,andherMotherranthebusinessandsocialaspectsoftheparish. Dollyinherited herFather’sstrongmoralvalues,and her Mother’sskillsinthe kitchenandwith finance. At the age of 15, Dolly began training as a nurse at the Springwood Royal Free Hospital. She qualified just before war broke out in 1914, and served as a military nurse in Northland and abroad. On returning home in 1918 she re‐joined the staff of the Free Hospital, where she remaineduntilshehadherfirstchildin1922. DollymarriedGeorgeVarden,Fairleigh’syoungdentist,in1920.FollowingherMother’sexample, Dollyengagedinvoluntarywork.Shewasparticularlyactiveinsupportingthemanypoorfamilies innearbySpringwoodand othercitieswhichsufferedbadlyduringtheeconomicrecessionof the 1920s. It was during this time that Dolly gained a reputation for her culinary skills, and many hundreds of families were grateful for her soup, which was provided to the community three timesaweek. After the birth of her second child in 1923, Dolly realised that she would find it increasingly difficulttocontinuehercharitableworkswhileraisingafamily.With herHusband’sfullsupport andhelpfromherMother, Dollybeganmakingandsellingsoupsfromaformerdisusedbakeryin thesamestreetasthefamilyhome.Thenow‐famousDollyVardenbrandwasborn. Within ten years, Dolly Varden had incorporated her business as a private company, with the initial shareholders being Dolly herself, her Husband George, and her Mother Alice. Employee numbers had reached thirty, and Dolly Varden soups were being sold by grocers throughout Northland. The company’s reputation for ‘home‐made’ and tasty soup at an affordable price madeDollyVardenahouseholdname.In1964 Dollyhandedovertheday‐to‐dayrunningofthe businesstoherdaughterLily.Dolly’sGrandsonMarcusbecameManagingDirectorin1988. 6
K AP L AN P U B L ISH IN G
MOCK E X AMA QU E STIONS
ThoseassociatedwiththeDollyVardenbusiness willknow,and otherswillprobablyhaveheard, that the company has an unconventional, yet admirable, approach to business. Margins are restricted to relatively low levels, by means of careful pricing and paying higher‐than‐average salaries. Retailers are prohibited from adding excessive mark‐ups to Dolly Varden soups, under threatofbeingremovedfromtheDollyVardencustomerlist. Itisapparentlystillcommonformanagersandemployeestoask,“whatwouldDollyhavedone?”, if they are struggling to reach a consensus. The founder seems to be an informal arbiter in the company’s participative management approach. Indeed, the company abounds with tales of thingsthatDollydid. Everyemployeeownsatleastoneordinaryshareinthebusiness,andeachshareholder(including those from ‘The Families’) has equal voting power at General Meetings. While members of the Varden and Milner families still own a significant majority of the shares, they believe it is appropriatethattheycan be‘calledtoaccount’ bytheemployees.InthehistoryofDollyVarden, thefamilymembershaveneverbeenout‐votedbytheemployees,butthepossibilityremains. Dividends are paid at very modest levels, and any ‘accidental’ super‐profits are donated to the Dolly Varden Charitable Trust. The Trust supports a wide range of charities and voluntary organisations,mostofwhichareassociatedwiththelocalcommunity.Employeesareencouraged toengagein voluntarywork, andareallowed totakeanextra tendaysofpaidleave topursue suchactivities.Financialsupportisalsogiven,bytheTrust,toemployees’childrenofwhowishto pursueundergraduateandpostgraduatecoursesthathavesome‘moral purpose’,suchassocial workormedicine. ManystorieshavebeentoldabouttheDollyVardenbusinessmodel,butonehasbeenprovedby theauthortobetrue–DollyVarden isnotfor sale.AccordingtotheCompanySecretaryofDolly Varden,theFamilieshave received‘manyhundreds’ofofferstopurchasetheirshares,including several‘unlimited’offersfrommajormultinationalfoodmanufacturers.Eachofferorhasreceived thesameresponse–aphotocopyoftheoriginalletterwrittenby MrsIsobelVardentothefirst persontomakesuchanoffer.Dated1937,thehand‐writtenletter thanks therecipientfortheir ‘kindandgenerous’offer,butpolitelydeclines.Accordingto the letter,‘Youcan beassuredthat DollyVardenwillneverbesold’.
K AP L ANP U B L ISH IN G
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ACCA SBL:STR ATE GIC B U SIN E SSL E AD E R
EXHIBIT2 EthicalCode(FromtheDollyVardenManagementandEmployeeHandbook) 1. ShareholdersandOwners Intheexerciseoftheirownershiprights,shareholdersshould: 1.1. Configurethecompanyasaninstrumentattheserviceofcreatingmoderateand sufficientwealth,makingtheirindisputableobjectiveofobtainingashort‐termprofit secondarytothatofsustainable,environmentallysoundsocialdevelopment,making certainthatallactivitiesarecarriedoutinanethicalandresponsiblemanner. 1.2. Configurethecompanyasalong‐termentity,notcompromisingitscontinuity throughaninterestinshort‐termenrichment. 1.3. ExercisevotingrightsattheGeneralShareholders’Meetingsonaninformedand responsiblebasisand,indoingso,alwaysdemandthehighestethicalbehaviourfrom thecompany,itsofficersandemployees. 1.4. Searchforafairbalancebetweencapitalandworkinsuchafashionthat,through theirsalariesandbenefits,workersreceivefairandjustcompensationfortheirwork. 1.5. Appointasdirectorsandmanagementpersonswhomeettherequisitesestablished regardingadequatepreparationandexperience,andwhocarryoutmanagement functionsinaprofessional,ethicalandresponsiblemanner. 1.6. Defineanddefendthemissionandvaluesofthecompanyinaccordancewiththis CodeofEthics. 2. Directors,managersandemployees Intheexerciseoftheirfunctions,theyshould: A)Inrelationtoemploymentfunctions: 2.1. Carryouttheiractivitiesinaprofessional,ethicalandresponsiblemanner. 2.2. Comply,anddemandcompliance,withthisCodeofEthicsand,tothatend,makethe Codeknownandestablishappropriatemechanismstoguaranteeitsapplication.In particularthereshouldbeanEthicsCommittee,madeupofpeoplewithsufficient powertoapplythisCodeandcorrectinfractions. 2.3. Informownersorshareholdersperiodicallyandaccuratelyastothesituationof,and outlookfor,thecompany. 2.4. PromoteeffectiveparticipationbyshareholdersattheGeneralMeetings,especially byfacilitatingtheprovisionofinformationandthemaintenanceofequalvoting rights. 2.5. Comply,anddemandcompliance,withgenerallyacceptedaccountingstandardsand principles,andestablishinternalandexternalmanagementandcontrolsystemsin accordancewiththecharacteristicsandvaluesofthecompany. 2.6. Keepthebooksandledgersofthecompanyinanaccurateandhonestmanner,in ordertopermitthatinformationbeobtainedanddecisionsbetakenonaninformed andresponsiblebasis. 2.7. Provideexternalandinternalauditorsofthecompanywithallsuchinformationand explanationsasmayberequiredtocarryouttheirwork.
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K AP L ANP U B L ISH IN G
MOCK E X AMA QU E STIONS
2.8.
2.9.
2.10.
2.11.
2.12.
2.13.
2.14.
Subordinatetheirownintereststothoseofthecompany,whenactingonbehalfand inrepresentationthereof,andnotusecorporateassetsintheirownbenefit,except withduetransparency,priorauthorisationfromtherelevantcorporatebodyandin exchangeforconsiderationdeemedappropriateincomparisontothemarket. ImmediatelynotifytheBoardastoanyeventorsituationwhichwouldrepresentor couldgiverisetoaconflictbetweentheinterestsofthecompanyandtheindividual interestsofthedirectorormanager,andabstainfromparticipatingintheresolution. Facilitatethetransparencyof,andcontrolover,theirremunerationinsuchaway thatitisguaranteedtobeappropriatetotheirlevelofresponsibilityand performanceandtothecharacteristicsofthecompany. Maintainasconfidentialthebackground,dataanddocumentstowhichtheyhave accessbyvirtueoftheirfunctionsinthecompany,evenwhentheynolongercarry outsuchfunctions. Makepaymentandcomplywithdebtsincurredbythecompanywithoutunjustified delayorbreach,andcollectonbalancesduewiththediligencerequiredineachcase andwithdueregardtothecircumstancesofthedebtor. Prepare,andmaintaininplace,asuccessionplanforkeypositionswithinthe company,favouringcurrentemployeesandofficers,toensurethatthecontinuityof thecompanydoesnotdependonthecontinuedpresenceofanydirectoror manager. Choosetheircolleaguesandsubordinatesinaccordancewiththeprinciplesofmerit andcapacity,lookingonlytofulfiltheinterestsofthecompany.
B)Inrelationtosuppliers,customersandconsumersoftheCompany: 2.15. Maintainethicalandopenrelationshipswithsuppliersofgoodsandservices. 2.16. Searchforandselectonlysupplierswhosebusinesspracticesrespecthumandignity andthevaluesofthecompany,arenotinbreachoflawanddonotplacethe company’sreputationindanger. 2.17. Selectsuppliersonthebasisoftheappropriatenessoftheirproductsorservices,as wellasoftheirprices,deliveryconditionsandquality,notacceptingorofferingany giftsorcommissions,incashorinkind,howevertrivialorlowvalue,whichmightbe perceivedtoaltertherulesoffreecompetitionintheproductionanddistributionof goodsandservices. 2.18. Aspiretoexcellenceinthegoodsandservicesofthecompanyinsuchawaythat customersandconsumersobtainthesatisfactionexpectedtherefrom. 2.19. Guaranteetheproductsandservicesofthecompanywithoutquestionanddeal quicklyandefficientlywithcustomerandconsumerclaims,withaviewtoachieving satisfactionanddelightfarbeyondmerecompliancewithprevailinglegislation. 2.20. Excludefromserviceanycustomerbelieved,onexaminationofappropriate evidence,tobeearningexcessiveprofitsfromthere‐saleofthecompany’sproducts. C)InrelationtocompetitorsoftheCompany: 2.2...
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