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 | 618.5 KB |
| File Type | |
| Total Downloads | 28 |
| Total Views | 161 |
Summary
SBL Mock Test 2020-21...
Description
ACCA PaperSBL StrategicBusinessLeader September2019toJune2020 MockExamA(DOLLYVARDEN)–Answers
Togainmaximumbenefit, donotreferto theseanswers untilyouhavecompletedthemockexamquestionsand submittedthemformarking.
ACCA SBL:STR ATE GIC B U SIN E SSL E AD E R
©KaplanFinancialLimited,2019 All rightsreserved.Nopartofthisexaminationmaybereproduced or transmittedinanyformor byanymeans,electronicormechanical,includingphotocopying,recording,orbyanyinformation storageandretrievalsystem,withoutpriorpermissionfromKaplanPublishing. Thetextinthismaterialand anyothersmadeavailableby any KaplanGroupcompanydoesnot 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
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Keyanswertips
Timemanagementiscritical –
You will have four hours (240 minutes) to read and analyse the case study and requirements, plan your approach to answering each of the tasks, and produce full answerstothemall.
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The examiners' recommended approach is that you allocate 40 minutes to RPRT ‐ readingandannotatingthecase, leaving 200 minutesforplanning andwritingupyour answers.
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Given the 20 professional marks are earned how you write your answers (rather than writinganythingextra),this means200minutesfor 80technicalmarks,or2.5 minutes pertechnicalmark.
Usingthereadingtime(RPRT)effectively –
Yourobjectivehereistoreadandunderstandthescenarioandrequirementsfullywithin 40minutes.
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Startbyreadingtherequirements,sothatwhenyou readthrough12ormorepagesof exhibits,youcanevaluatetheinformationand linkallpiecesofrelevantinformationto therequirements.Asyoudothis,startthinkingabout theimplicationsofwhatyouare reading, and mentally compile a big picture of the organisation and the issues it is currentlyfacing.
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The exam you will be sitting is (currently) paper‐based so you should highlight and annotatethoseareasoftextthatyouconsidertobeuseful toansweringthequestions, linkingthemtothedifferentrequirements.
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Weakercandidatesannotatefar toomuch,sotry tobeselectiveandprioritiseissuesas yougoalong.
Planninganswers‐startbyanalysingtherequirementitself: –
Whatroleareyouadopting?
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Whoisthereportforandwhatdotheywant?
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Whatverbshavebeenusedtoexpresstherequirement?
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Arethereanylimitationsofscopehighlighted?
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Arethereanykeyissuesmentionedthatneedaddressing?
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Areanycalculations,ratiosorotherquantitativeanalysisrequired?
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Doesthequestionlenditselftotheuseofaspecifictheoreticalmodel?
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Whichprofessionalskillisbeingexplicitlytested?
Writingupaplan: –
Setupkeyheadings‐theseshouldnowbeobviousfromthewordingoftherequirement andthechoiceofmodel(ifany).
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Fillinkeyissuesundertheheadings,firstlyfromwhatyourememberandthenbylooking againatyourannotationsontheexampaper.
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Earningprofessionalskillsmarksasyouwriteupyouranswers Todemonstrateprofessionalismandearnskillsmarksyouneedtodothefollowing: –
Addresstherequirementsaswritten,takingparticularnotice(again!)oftheverbsused
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Make sure you include the most important, relevant and crucial points relating to the requirement.
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Only make relevant points and try not to include superfluous information or make unsupportedpoints.
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Show deep/clear understanding of underlying or causal issues and integrate or link differentsourcesofinformationfromvariouspartsofthescenarioordifferentexhibitsto makepoints
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Avoidrepeatingpointsalreadymade.
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Showyourabilitytoprioritiseand makepointsin alogicalandprogressiveway,building arguments rather than using a random or ‘scattergun’ approach to answering the question.
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Structure and present your answers in a professional manner through faithfully simulatingthetaskaswouldbeexpectedoftheperson beingasked to carryit out and alwayshaveaclearstakeholderfocusinmindwhenconstructingtheanswer.
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Demonstrateevidenceof yourknowledgefrompreviouslearningor widerreading and apply this knowledge appropriately to strengthen arguments and make points more convincing.
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Inadditiontobeing clear,factualandconcise,youshouldexpressyourselfconvincingly, persuasivelyandwithcredibility.
Alwayskeepyoureyeontheclockanddonotoverrunonanypartofanyquestion!
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Report From:SpecialProjectsAssistant To:CEO Date:Today STRICTLYPRIVATEANDCONFIDENTIAL Growthandthe‘culturalweb’ofDollyVarden The cultural webwasdevisedbyGerryJohnsonas partofhisworktoattempt toexplain whyfirmsoftenfailedtoadjust toenvironmentalchangeasquickly as theyneededto.He concluded that firms developed a way of understanding their organisation – called a paradigm – and found it difficult to think and act outside this paradigm if it were particularly strong. The components of Dolly Varden’s web, and how they may have affectedhistoricgrowthanddevelopment,areasfollows:
Routines and rituals – routines are ‘the way things are done around here’ and may evendemonstratea beneficialcompetency.Theycanbethewrittenorunwritten rules of the game within the organisation. In Dolly Varden, such rituals abound. Restricting margins by lowering prices may well have led to increases in sales volumes, but may alsohaveaffectedcustomerandconsumerperceptionsofthe‘value’ofourproducts.It willcertainlyhaveadverselyaffectedmargins,andmay have ledtoashortageoffunds for investment. Making large charitable donations might improve staff loyalty, and enhancethepublic imageofDollyVarden,butwillalsohavehadadetrimentaleffect on margins. Unless such corporate activity leads to increased sales and profit, it is detrimental to growth. Removing customers from our list, for applying ‘excessive’ mark‐ups to our products, will have stifled growth in turnover and may be a major causeofourlossofmarketshare.Supermarketsareverypowerfulcustomers,andthey will have access to many other soup suppliers. While I have no information which supermarketswe currentlydobusinesswith,itwould be nosurprisetolearnthatwe selltoofewofthebiggersupermarketchains. Symbols – such as logos, offices, cars, titles, type of language and terminology commonlyused,becomeashorthand representationofthenature oftheorganisation. Everythingthecompanydoes istied tothepersonaof thefounder.Everycanofsoup weproduceissoldunderthe DollyVarden brandname.Thereisa significantriskthat thecompanystilloperatesasifitisthetwentiethcentury,andasmall,familycompany. Storiesandmyths–employeestelloneanotherandothersabouttheorganisation,its history andpersonalities;usedtocommunicatetraditions,standards androlemodels. Asking“whatwouldDollyhavedone?”asawayofprompting decisions,willcertainly reinforcetheculturalparadigm.However,basingmodernbusinessdecisionsonviews heldacenturyagoseemsa riskywayofdoingbusiness.Such resistancetochangemay wellhaveledtoDollyVarden’sprocessesandproductsbecomingincreasinglyobsolete. Powerstructure – formalorinformalpower or influence by virtue of position, control of resources, who the person knows, or history. This may be based on management positionandsenioritybutinsomeorganisationspowercan belodgedwithother levels orfunctions.
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Theconcentrationofday‐to‐dayexecutivepowerinthehands offamilymembersmay lead to Dolly Varden being resistant to change and conservative. Although family memberscanbeout‐votedbyemployees,thishasneverhappened.
Organisationalstructure–reflectstheformalandinformalroles,responsibilities, and relationshipsandwaysinwhichtheorganisationworks.Structuresarelikelytoreflect power.Theparticipativemanagementstyleofthecompany isgoodformotivation and engagement, but might have led to it becoming increasingly risk‐averse and slow to react. Allowing staff additional annual leave, to pursue voluntary activities is, again, great for motivation and engagement, but bad for productivity. Not only are staff overpaid,therearealsotoomanyofthem. Control systems – the measurement and reward systems that emphasise what is importanttomonitorand to focusattentionandactivityupon. Payingsalariesoverthe marketrateisgood forengagement,butmayleadto staffbecomingcomplacentand unproductive.Therestrictionofmarginshasprobablyshiftedtheemphasis of control systems away from financial (cost) controls. This may have led to inefficiencies and excessive,orout‐of‐control,costs.
Conclusion Ourmarketshare has fallenfrom20% to 15% over the last twenty years. Ourgross margin (30%) and pre‐tax margin (10%) both lag behind the sector averages (44% and 21%). The lossofmarketshareandlowlevelsofmargincanprobablybeattributed,toagreat extent, tothecultureoftheorganisation. TheEthicalCodeandthefuture It is important to stress that having a strong ethical and moral approach to business is a goodthing.DollyVardenappearstoaspire tobeinga‘shaperofsociety’ inthisregard,and that is to be applauded. However, there are elements in the Code that might limit the company’sabilitytoachievegrowthinthefuture; 1.1 The aim to create ‘moderate and sufficient wealth’ is incompatible with a growth strategythatenvisagesshorttermprofit growth.Itislikelytoleavethecompanyshort of funds for investment. This is, however, tempered by the focus on sustainability, as it suggestsinvestmentinprojectswithalong‐termreturn. 1.4‘Fairandjustcompensation’ doesNOT meanexcessiverewardpackages thatareabove the average for the industry. This should not limit growth opportunities, but seems to conflictwiththeapproachbeingtaken. 2.4 The maintenance of ‘equal voting rights’ might prove limiting to growth, as existing minorityshareholdersmightblockattemptstoraise anyadditionalcapitalthatis required tofundgrowth.Itisalsocontrarytotheprinciplesofshareholderdemocracy. 2.12 Settling payables ‘Without unjustified delay’ might be interpreted as a constraint on thecompany’sabilitytofinanceexpansion throughworkingcapitalmanagement.Itisalso difficulttoreconcilewithanindustrywheremajorcustomerstake90‐120days’credit.
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2.16 This limits the company’s choice of supplier, and may prove a barrier to growth if suitablesupplierscannotbeidentifiedtosupportincreasedproduction.Itwouldbeironicif DollyVarden’sgrowthaspirationsweretobethwartedbyalackofsuitablesuppliers. 2.20 As mentioned previously, the exclusion of customers on the basis that they make ‘excessive profits’ is severely limiting. It is also questionable whether it is Dolly Varden’s right to interfere in the free operation of product markets. Growth will be difficult to achieveunlessDollyVardenisabletoselltoanyavailablemarket. 2.21Obtaininga‘dominantorprivilegedmarketposition’isthe foundationofcompetitive advantage. It could be argued that any behaviour related to achieving and maintaining a competitive advantage is an abuse of position. If Dolly Varden is able to achieve a competitiveadvantage,itmustbeallowedtoexploitit. 2.31Itisonly possibleto‘mitigate’(reduce)risk,nottoeliminateit.Aiming to‘maximise prevention’couldbeprohibitivelyexpensive. 2.39Asmentioned previously,reducingretainedprofit(andtherefore cash)severelylimits thefundsavailableforexpansion. Conclusion In conclusion, several clauses in the Ethical Code are not consistent with the pursuit of a growthstrategy.
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Report From:SpecialProjectsAssistant To:TheBoard Date:Today STRICTLYPRIVATEANDCONFIDENTIAL GROWTHSTRATEGIES 1.Optionsforgrowth We can discuss and evaluate the growth strategies available by reference to the various modelsdevelopedbyIgorAnsoff. Marketpenetration These strategies pursue growth by increasing revenues from current products in existing markets. For Dolly Varden, that means selling more soup in Europe. Examples of such strategies include investing in marketing, finding more customers, or combining with another European soup manufacturer. These strategies are safe and unexciting. They are unlikely (other than merger or acquisition) to achieve significant growth, as it may take yearstochangecustomerandconsumerperceptions.
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Productdevelopment Thesestrategiesinvolvefindingnewproductsforour existingcustomers.Exampleswould include developing new soup recipes, fresh soups, or other canned foodstuffs. This is a possiblegrowthopportunityforDollyVarden,butit isuncertainwhetherthe brandwould readily translate onto non‐soup products. We would also have to overcome loyalty to existingbrands. Marketdevelopment Asall ourrevenuescomefromwithinEurope,markets for ourexistingsoupsexist further afield.Wecould,forexample,lookforretailersoperatinginAsia,AfricaortheUS.Itisalso possiblethatsomeofourcurrentretailercustomershavebranchnetworksoutsideEurope, wheretheymightsellour soup.However,wewouldhavetoaddresstheconstraint to our business from our requirement that customers do not impose ‘excessive’ mark‐ups. This policyislikelytoalienatepreciselythosecustomerswhooperateinmultiplecountries. Diversification Diversificationmeansmovingsimultaneouslyintonew productandmarketareas.ForDolly Varden,thisincludesmanydifferentpossiblestrategies: ‐Backwardsverticalintegration:ThiswouldtakeDollyVardenintoproduct‐marketareas currently occupied by our suppliers. An example might be the acquisition of a farm, or vegetablewholesaler.It isnotreally feasibleforDollyVardentopursuesuchstrategiesby organic growth. We also lack experience in these markets, so acquisition would allow us access to a talent pool. However, we lack available investment funds to make an acquisition. ‐ Forwards vertical integration: This would take us into product‐market areas currently occupiedbyourcustomers.Wemight,forexample,decidetoopenachainofretailoutlets. Thiswouldseemtobeasensiblemove,butitcomeswithproblems.DollyVardenwouldbe competingwithitsowncustomers,somethingwhichtheywouldseeasathreat.Wealso have no experience in retailing, and would probably have to acquire an existing retail networkinordertoachievesignificantgrowthintheshort‐ormedium‐term. ‐ Horizontal integration: While not really ‘diversification’, as it achieves market penetration, this method of integration would see us acquire or merge with another European soup manufacturer. While this is the safest of the diversification options, and achieves growth immediately, it would be unlikely to appeal to shareholders. We have a very strong culture, which we would probably wish to impose on any acquisition target. This would be very difficult, and might destroy any synergies available from combining businesses. Many of the smaller manufacturers, that existed a decade ago, have already been acquired by our rivals. The remaining small manufacturers in Northland represent onlyatinyshareofthemarket. ‐ Conglomerate diversification: A conglomerate is a business made up of unrelated elements. Conglomerates can be either ‘loose’, where there is little or no relationship betweentheelements,or‘tight’,wherethereisaclearthemetotheconglomerate.
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For Dolly Varden, a loose relationship might be something like tourism (we could open a visitor centre, at our factory, for example), whereas a tight relationship might be canned drinks, or ready‐meals. This is the highest‐risk form of diversification, as it would take us intoareasinwhichwehavenoexpertise,andwhichareunlikelytogeneratesynergieswith ourexistingbusiness. Growthmethods Any of the above (except horizontal integration, which is always done by merger or acquisition)canbepursuedbythreedifferentmethods: ‐ By organic growth, where Dolly Varden invests its own funds into developing the new businessarea.Thisisaslower,butsafer,methodofgrowth. ‐ By joint venture or alliance, where Dolly Varden partners with another organisation, sharingrisk andreward.This wouldnotgenerateasmuchgrowth astheothermethods, as itwouldhavetobesharedwithourpartner(s). ‐Byacquisition,whereDollyVardenbuys an existing business, or a stake inone.This is a risky,butmuchqu...
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