Business Strategy & Advisory Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Strategy & Advisory flashcards as text
In a TOWS matrix, the 'WT' strategies are designed to:
Answer: Minimize weaknesses by avoiding threats
WT (Weakness-Threat) strategies are defensive, aiming to reduce vulnerabilities and avoid external threats that could exploit internal weaknesses.
A CA advising on business continuity planning would identify the Recovery Time Objective (RTO) as:
Answer: The target duration within which a business process must be restored after a disruption
RTO defines how quickly a process or system must be restored after a disruption to avoid unacceptable business consequences.
Which of the following best exemplifies a 'related diversification' strategy?
Answer: An airline launching a hotel booking service
Related diversification leverages existing competencies or value chain links; an airline entering hotel bookings shares distribution, customers, and travel industry expertise.
In strategic management, 'dynamic capabilities' refer to a firm's ability to:
Answer: Sense, seize, and reconfigure resources in response to environmental change
Dynamic capabilities enable firms to adapt, integrate, and reconfigure internal and external competencies to address rapidly changing environments.
A company's EBITDA margin is a useful advisory metric because it:
Answer: Approximates operating cash generation independent of capital structure and accounting policies
EBITDA strips out interest, taxes, depreciation, and amortization to reveal underlying operating cash generation, enabling cross-company comparisons.
The 'ansoff matrix' cell representing the highest strategic risk is:
Answer: Diversification
Diversification involves entering new markets with new products, combining both market and product risk simultaneously — the highest risk quadrant.
When a CA advises on shareholder value creation, Economic Value Added (EVA) is preferred over net income because EVA:
Answer: Deducts the full cost of both debt and equity capital from operating profit
EVA subtracts the cost of all capital employed (including equity) from NOPAT, showing whether the business truly earns above its total cost of capital.