QUESTION: 33

As a qualified Management Accountant you have been asked by a non-financial manager to explain the CEO's recent comments, featured in the CEO's regular update to investors and analysts.

The CEO's update suggested the company, an established property development business, was about to pursue an exciting strategy. The strategy is to focus on conglomerate diversification, to be achieved through a number of pre-identified acquisitions, with the aim of significantly increasing shareholder value.

Which of the following statements is consistent with the concept of conglomerate diversification?

A strategy involving business expansion within a company's present industry. For this company, an example would be the acquisition of another property development business.
A structure involving a collection of unrelated businesses. For this company, acquisitions may include a variety of companies such as financial services and food retailing, all sharing operational relationships such as finance, sales and marketing.
A portfolio of unrelated businesses such as financial services, food retailing and property development, all sharing identity and risk, including group logo, corporate uniforms and risk management systems.
A portfolio of businesses involved in unrelated activities such as financial services, food retailing and property development, sharing nothing but a parent company.

Answer(s): D

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QUESTION: 34

Company GG is considering its future strategy on delivering a long-term competitive advantage. The Finance Director has recommended that the Board includes in the strategy a separate section on sustainability.

Which of the following is NOT a correct sustainability statement?

The creation of wealth should be integrated with long-term sustainable development.
An advantage of sustainable development is the reduction of costs though efficiency.
When establishing sustainability only financial key performance indicators should be considered.
Resources are used at a rate that allows them to be replaced.

Answer(s): C

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