ACA BST - DEC UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
What are the four key components of a mission statement?
Answer:
Purpose, Values, Policies, Strategy
Question:
What is the definition of strategy?
Answer:
Long-term direction and scope to achieve a competitive advantage through the
configuration of resources to meet the needs of the markets and fulfil
stakeholder expectations.
Question:
What makes planning strategic?
Answer:
Longer term, considers whole organisation, considers resources and external
environment, considers all stakeholders, looks at gaining a sustainable
competitive advantage
Question:
Rational approach to strategic planning
Answer:
formal and systematic, identify goals and select strategies to achieve them
Question:
Merits of strategic planning
Answer:
Provides a framework. Encourages long-term planning. Goal congruence.
Considers the needs of stakeholders. Optimised use of resources. Considers
changes in the business environment. Monitors progress
Question:
Demerits of strategic planning
Answer:
Lack of evidence to prove that it leads to success. Businesses may need to be
more dynamic and react to problems as they occur. Formal planning reduces
initiative and innovative thinking. Political infighting can disrupt the process
Question:
What are emergent strategies
(aka bottom up approach)?
Answer:
Behaviours adopted that have a strategic impact, emerge over time in
response to the environment
,Question:
Suitability of the emergent approach
Answer:
Dynamic environments and require quick decision making Have flexible,
decentralised structures, managers can make decisions
Question:
Different grades of strategy (Mintzberg)
Answer:
Intended strategy - conscious decision Deliberate strategy - put into practice
Realised strategy - resultant energy
Unrealised strategy - strategy not implemented Emergent strategies - develop
over time
Question:
Resource-based (inside-out) strategic advantage
Answer:
focus on developing internal competencies and resources that are hard to
imitate and find or create markets to exploit these strengths
Question:
Risks of resource-based strategic advantage
Answer:
may fail to react to long-term industry trends, may find their resources and
competencies are no longer valued by the customer
Question:
Positioning (outside-in) strategic advantage
Answer:
analyse the external environment to identify customer needs and adapting to
meet those needs
Question:
Risk of positioning strategic advantage
Answer:
forced to constantly evolve and develop new competencies as customer's
needs are ever changing
Question:
Influences on planning horizons
Answer:
Nature of ownership - quick returns vs long term provision Capital structure -
banks may expect returns over a long period of time
Nature of industry - high level of capita; expect returns generated over a long
period of time Nature of Business Environment - dynamic industry, may be
better to plan short term and react to current market Nature of Management -
need time and skill to master long-term planning
Question:
What is a mission statement?
Answer:
Brief statement set out in general terms which doesn't include a timeframe or
, commercial terms, written to internal and external stakeholders.
Rational approach - mission at the start point of strategy formulation
Question:
Advantages of a mission statement
Answer:
Help resolve stakeholder conflict Set the direction of the organisation and so
help formulate strategy Help communicate the values and direction of the
organisation to stakeholders
Question:
Criticisms of mission statements
Answer:
Often full of meaningless terms, give staff little idea of what to aim at Often
ignored by managers Often considered to be just a PR exercise
Question:
Objectives should be SMART
Answer:
Specific, Measurable, Achievable, Realistic, Time-bound
Question:
Objectives of profit-making entities
Answer:
Primary - maximise shareholder wealth Secondary - e.g. customer satisfaction,
social responsibility, innovation, meaningful employment
Question:
Objectives of not-for-profit entities
Answer:
Primary - maximise benefit to target stakeholder Secondary - e.g. investing in
staff, minimal impact on the local environment, economy, efficiency,
effectiveness
Question:
Issues with the objectives of NFPs
Answer:
Often have multiple objectives to consider Difficult to measure as success is
typically non-financial Stakeholder conflicts more difficult to resolve as they
usually have a wide range of
influential stakeholders Financial constraints may limit the amount that they
can achieve
Question:
Mendelow's Matrix for stakeholder mapping
Answer:
Interest - Power L-L - minimal effort directed L-H - keep satisfied H-L - keep
informed H-H - key player needs participation
CORRECT ANSWERS
Question:
What are the four key components of a mission statement?
Answer:
Purpose, Values, Policies, Strategy
Question:
What is the definition of strategy?
Answer:
Long-term direction and scope to achieve a competitive advantage through the
configuration of resources to meet the needs of the markets and fulfil
stakeholder expectations.
Question:
What makes planning strategic?
Answer:
Longer term, considers whole organisation, considers resources and external
environment, considers all stakeholders, looks at gaining a sustainable
competitive advantage
Question:
Rational approach to strategic planning
Answer:
formal and systematic, identify goals and select strategies to achieve them
Question:
Merits of strategic planning
Answer:
Provides a framework. Encourages long-term planning. Goal congruence.
Considers the needs of stakeholders. Optimised use of resources. Considers
changes in the business environment. Monitors progress
Question:
Demerits of strategic planning
Answer:
Lack of evidence to prove that it leads to success. Businesses may need to be
more dynamic and react to problems as they occur. Formal planning reduces
initiative and innovative thinking. Political infighting can disrupt the process
Question:
What are emergent strategies
(aka bottom up approach)?
Answer:
Behaviours adopted that have a strategic impact, emerge over time in
response to the environment
,Question:
Suitability of the emergent approach
Answer:
Dynamic environments and require quick decision making Have flexible,
decentralised structures, managers can make decisions
Question:
Different grades of strategy (Mintzberg)
Answer:
Intended strategy - conscious decision Deliberate strategy - put into practice
Realised strategy - resultant energy
Unrealised strategy - strategy not implemented Emergent strategies - develop
over time
Question:
Resource-based (inside-out) strategic advantage
Answer:
focus on developing internal competencies and resources that are hard to
imitate and find or create markets to exploit these strengths
Question:
Risks of resource-based strategic advantage
Answer:
may fail to react to long-term industry trends, may find their resources and
competencies are no longer valued by the customer
Question:
Positioning (outside-in) strategic advantage
Answer:
analyse the external environment to identify customer needs and adapting to
meet those needs
Question:
Risk of positioning strategic advantage
Answer:
forced to constantly evolve and develop new competencies as customer's
needs are ever changing
Question:
Influences on planning horizons
Answer:
Nature of ownership - quick returns vs long term provision Capital structure -
banks may expect returns over a long period of time
Nature of industry - high level of capita; expect returns generated over a long
period of time Nature of Business Environment - dynamic industry, may be
better to plan short term and react to current market Nature of Management -
need time and skill to master long-term planning
Question:
What is a mission statement?
Answer:
Brief statement set out in general terms which doesn't include a timeframe or
, commercial terms, written to internal and external stakeholders.
Rational approach - mission at the start point of strategy formulation
Question:
Advantages of a mission statement
Answer:
Help resolve stakeholder conflict Set the direction of the organisation and so
help formulate strategy Help communicate the values and direction of the
organisation to stakeholders
Question:
Criticisms of mission statements
Answer:
Often full of meaningless terms, give staff little idea of what to aim at Often
ignored by managers Often considered to be just a PR exercise
Question:
Objectives should be SMART
Answer:
Specific, Measurable, Achievable, Realistic, Time-bound
Question:
Objectives of profit-making entities
Answer:
Primary - maximise shareholder wealth Secondary - e.g. customer satisfaction,
social responsibility, innovation, meaningful employment
Question:
Objectives of not-for-profit entities
Answer:
Primary - maximise benefit to target stakeholder Secondary - e.g. investing in
staff, minimal impact on the local environment, economy, efficiency,
effectiveness
Question:
Issues with the objectives of NFPs
Answer:
Often have multiple objectives to consider Difficult to measure as success is
typically non-financial Stakeholder conflicts more difficult to resolve as they
usually have a wide range of
influential stakeholders Financial constraints may limit the amount that they
can achieve
Question:
Mendelow's Matrix for stakeholder mapping
Answer:
Interest - Power L-L - minimal effort directed L-H - keep satisfied H-L - keep
informed H-H - key player needs participation
