ACCA SP Strategic Business Leader (SBL) — Questions and Answers
Question 1: A company's board is considering a strategic alliance with a competitor to enter a new market. Which of the following is the MOST significant risk that the board should evaluate before proceeding?
- The alliance may reduce short-term profitability
- The partner may gain access to proprietary knowledge and become a stronger competitor (Correct answer)
- Employees may resist the cultural changes required
- The alliance may attract regulatory scrutiny
Correct answer: The partner may gain access to proprietary knowledge and become a stronger competitor
While all options present valid concerns, the most significant strategic risk is knowledge leakage to a competitor. In a strategic alliance with a competitor (co-opetition), the partner gaining access to proprietary knowledge, processes, or customer relationships could strengthen them as a future competitor, fundamentally undermining the company's competitive advantage.
Question 2: According to Mendelow's stakeholder mapping matrix, which strategy is most appropriate for stakeholders with HIGH power and LOW interest?
- Key players — closely manage
- Keep satisfied — monitor for changes in interest level (Correct answer)
- Keep informed — maintain regular communication
- Minimal effort — no action needed
Correct answer: Keep satisfied — monitor for changes in interest level
Mendelow's matrix classifies stakeholders by power and interest. High power/low interest stakeholders should be kept satisfied because while they are not currently engaged, they have the power to significantly impact the organisation if they become dissatisfied. Provoking their interest through neglect could be damaging.
Question 3: The board of a listed company discovers that the CEO has been awarding contracts to a company owned by a close family member without disclosure. Which corporate governance principle has been PRIMARILY breached?
- Accountability
- Transparency
- Integrity (Correct answer)
- Fairness
Correct answer: Integrity
While transparency is also breached (lack of disclosure), the primary principle violated is integrity. Integrity requires board members to act honestly and in the best interests of the company, avoiding conflicts of interest. Awarding contracts to a family member's company without disclosure is a fundamental breach of integrity as it places personal interests above those of the company and its shareholders.
Question 4: A multinational company uses a balanced scorecard. Which of the following measures would BEST fit the 'internal business processes' perspective when assessing digital transformation progress?
- Customer satisfaction scores with digital channels
- Percentage of business processes automated end-to-end (Correct answer)
- Return on investment from technology spending
- Number of employees completing digital skills training
Correct answer: Percentage of business processes automated end-to-end
The internal business processes perspective focuses on the efficiency and effectiveness of internal operations. The percentage of processes automated end-to-end directly measures how internal processes are being transformed. Customer satisfaction is the customer perspective, ROI is financial perspective, and employee training is the learning and growth perspective.
Question 5: When applying the TARA framework to risk management, which response involves accepting the risk but implementing controls to reduce its impact or likelihood?
- Transfer
- Avoid
- Reduce (Correct answer)
- Accept
Correct answer: Reduce
The TARA framework offers four risk responses: Transfer (shift risk to a third party, e.g., insurance), Avoid (eliminate the activity causing risk), Reduce (implement controls to mitigate likelihood or impact while continuing the activity), and Accept (tolerate the risk without action). Reducing risk means keeping the activity but putting controls in place.
Question 6: A company is evaluating whether to outsource its IT function. According to the strategic management literature, which factor is MOST critical in determining whether outsourcing is appropriate?
- Whether the function can be performed more cheaply externally
- Whether the function represents a core competence of the organisation (Correct answer)
- Whether suitable outsourcing providers exist in the market
- Whether employees affected by outsourcing can be redeployed
Correct answer: Whether the function represents a core competence of the organisation
While cost is often the primary driver cited for outsourcing, strategic management theory (particularly the resource-based view and core competence theory from Prahalad and Hamel) emphasises that organisations should never outsource core competences as these are the source of competitive advantage. If IT is a core competence (e.g., for a tech company), outsourcing could destroy strategic capability.
ACCA SP Strategic Business Leader (SBL)
A company's board is considering a strategic alliance with a competitor to enter a new market.
Which of the following is the MOST significant risk that the board should evaluate before proceeding?