Series: NOV 2015

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CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

Question

Ade John is a graduate of XYZ University. For his final project work in the Department of
Electronics and Electrical Engineering, he designed a cell-phone that is rugged, cheap,
handy and not sophisticated.
During his national service year, he kept toying with the idea of manufacturing the cellphone. To ascertain that there is a market for the phone, he carried out a series of market surveys among rural farmers, artisans, market women, etc. Each time, he was convinced that a market actually exists for his design. He also made contact with some manufacturers of cell-phone components. He entered
into an agreement with CKT Japan to import cell-phone accessories to enable him
assemble them in Nigeria. DAB phone is the first of its kind in the Nigerian market and
production and assembly commenced in a small room in his uncle‟s house at Ikare.
The first batch of phones manufactured by DAB Company was supplied to cell-phone
vendors in cities on „sale or return‟ basis. To encourage distributors to accept the
phones, a 15% margin was allowed. In addition, independent sales persons (hawkers)
were given between 10 -12% margin to sell the product. In spite of the low price of DAB
phones, demand was disappointing at the end of the first year. Nevertheless, Ade John is
still optimistic about the commercial viability of the phone if only he could develop an
effective strategy to market the DAB phones

Required:
a. Identify and explain TWO reasons for the slow growth of sales of DAB phones. (4 Marks)
b. With the aid of an S-shaped growth curve, evaluate market development of DAB phones. (6 Marks)
c. Recommend the strategies that Ade John can use to improve sales. (5 Marks)

Answer

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Tags: Market Entry, Product Development, S-shaped Growth Curve, Sales Strategy
Level: Level 2

Topic: Corporate Strategy Formulation
Series: NOV 2015

CSME – Nov 2015 – L2 – Q6 – Corporate Governance

Evaluates how specific corporate governance issues impact the effectiveness of a company's governance.

Question

Explain briefly how the following key issues in corporate governance establish how well or badly a company is governed:

a. The role and responsibilities of the board of directors
b. The composition and balance of the board of directors
c. Financial reporting, narrative reporting, and auditing
d. Directors’ remuneration
e. Risk management and internal control

Answer

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Tags: Board Composition, Corporate Governance, Directors’ Remuneration, Financial Reporting, Risk Management
Level: Level 2

Topic: Corporate Governance
Series: NOV 2015

CSME – Nov 2015 – L2 – Q5 – Corporate Governance

Outlines key responsibilities and duties of the board in corporate governance, relevant for improving corporate structure and performance.

Question

The owner of ABC Company learned from a conference and a professional magazine that weak corporate governance accounted for recent corporate failures in Nigeria. Many board members were found lacking a clear understanding of board responsibilities and duties.

Required:
The Managing Director will soon address the board and has requested a paper detailing the board’s responsibilities and duties.

Answer

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Tags: Accountability, Board Duties, Board Structure, Corporate Governance, Strategic Oversight
Level: Level 2

Topic: Corporate Governance
Series: NOV 2015

CSME – Nov 2015 – L2 – Q4 – Risk Management and Corporate Strategy

Analyzes strengths and weaknesses of Toyin Trust Insurance Plc pre- and post-2000 ownership changes, and suggests strategies for sustaining the company.

Question

Toyin Trust Insurance Company is one of the duly registered insurance companies in Nigeria. Ten years after it started operations in 1990, the company had become a household name in the market. Its strengths included timely payment of claims and introduction of quality products that captured changing customers’ needs.

At inception, the company was 100% foreign-owned, with five of the seven directors being experienced expatriate insurance practitioners. However, by 2000, over 90% of the equity had been transferred to Nigerian investors. In 2009, following reorganization, many experienced senior managers resigned, and inexperienced staff took over key positions, leading to a decline in service quality and a 40% drop in premium collection.

Required:

a. Analyze the strengths of Toyin Trust Insurance Plc before 2000. (5 Marks)
b. Analyze the strengths and weaknesses of Toyin Trust Insurance Plc after 2000. (5 Marks)
c. Suggest essential strategies to sustain Toyin Trust Insurance Plc. (10 Marks)

Answer

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Tags: Business Growth, Organizational Challenges, Risk Mitigation, Strategic Management
Level: Level 2

Topic: Corporate Governance, Risk Management and Corporate Strategy
Series: NOV 2015

CSME – Nov 2015 – L2 – Q3 – Ethics in Business

Describes the nature of business and professional ethics, Kohlberg’s theory of moral development, and criticisms of the theory.

Question

Kalu, a competent consultant and accountant, works in Bosun and Company Limited. The company realized that almost all of its newly employed entry-level staff are deficient in business and professional ethics. Consequently, the Human Resources Manager recommended to the CEO that a training program on business and professional ethics should be organized. Kalu is nominated as a resource person to speak at the training program.

Required:
a. How should Kalu explain the nature and importance of business ethics and professional ethics? (6 Marks)
b. Advise Kalu on how he should analyze Kohlberg’s theory of moral development in an attempt to explain to the trainee participants how people generally develop a sense of morality both in personal and professional life. (10 Marks)
c. Discuss any TWO of the criticisms of Kohlberg’s theory. (4 Marks)

Answer

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Tags: Business Ethics, Ethical Training, Kohlberg’s Theory, Moral Development, Professional Ethics
Level: Level 2

Topic: Ethics in Business
Series: NOV 2015

CSME – Nov 2015 – L2 – Q2 – Risk Management and Corporate Strategy

Develops a risk management program for theft, diversion, and safety issues; includes risk reduction and financing techniques.

Question

Dolly Homes Plc is a real estate firm based in Abuja. The firm builds residential apartments and office blocks in five states of the federation. The objective of Dolly Homes Plc is to deliver high-quality, aesthetically designed, and professionally built homes/offices to its customers at competitive prices. It employs several skilled and casual workers, construction supervisors, construction engineers, architects, and quantity surveyors.

The company maintains a store at each of its building sites, each manned by a storekeeper and an assistant. Building materials are purchased centrally and delivered to sites per material schedules prepared by the quantity surveyor.

Patronage from middle and high-income brackets has been impressive; however, recently, the company has been receiving complaints about poor quality. The most alarming complaint involved a legal threat for injuries sustained when a kitchen cabinet collapsed in a client’s home.

Management’s investigation revealed theft of materials, diversion, and re-work waste due to poor finishing. There were also job site accidents, leading to employee injuries, lost hours, and increased medical claims.

Management decided to establish a risk management program to address theft, diversion, and health/safety issues.

Required:
a. As an Accountant, develop a risk management program to address Dolly Homes Plc’s problems. (8 Marks)
b. Advise management on techniques to reduce the frequency of risk exposures in the future. (6 Marks)
c. Suggest risk financing techniques to protect the company’s staff from injuries and accidents. (6 Marks)

Answer

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Tags: Construction Industry Risks, Risk Financing, Risk Management, Safety Measures, Theft Prevention
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: NOV 2015

CSME – Nov 2015 – L2 – Q1c – Corporate Governance

Discusses the difference between rules-based and principles-based professional ethics in accountancy.

Question

What is the main difference between a rules-based and a principles-based code of professional ethics for accountants?

Answer

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Tags: Accountancy Ethics, Principles-Based Ethics, Professional Conduct, Rules-Based Ethics
Level: Level 2

Topic: Corporate Governance
Series: NOV 2015

CSME – Nov 2015 – L2 – Q1b – Risk Management and Corporate Strategy

Discusses various methods for managing and controlling risks in an organization, illustrating different risk management techniques.

Question

There are different methods of managing and controlling risks. Explain and illustrate any THREE of the following approaches to risk management:
i. Risk Diversification
ii. Risk Transfer
iii. Risk Sharing
iv. Risk Hedging (15 Marks)

Answer

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Tags: Credit risk, Risk Diversification, Risk Hedging, Risk Sharing, Risk Transfer
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: NOV 2015

CSME – Nov 2015 – L2 – Q1a – Risk Management and Corporate Strategy

Explains credit risk management concepts, including exposure, losses, residual risk, and appetite.

Question

The finance director of Basket Company is preparing a proposal to present to the board of directors. He believes that the company is much too cautious in its policy of giving credit to customers. At the moment all customers are given 30 days’ credit. He believes that by increasing its exposure to credit risk, and increasing credit terms to 60 days, the company will achieve an increase in annual sales of up to 20%. He also thinks that some improvements in debt collection procedures will reduce the level of bad debts, although some bad debts cannot be avoided. He thinks that the value of sales where there is a default will fall each year from 2% of sales to 1.8% of sales. He proposes that in order to increase annual sales and profits, the company should be willing to increase its risk appetite and accept the risk of higher bad debts.

Required:

Using this example of managing credit risk, explain and illustrate the meaning of:
i. Exposure to risk
ii. Risk of losses
iii. Residual risk
iv. Risk appetite

Answer

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Tags: Credit Period, Credit risk, Exposure to Risk, Residual Risk, Risk Appetite, Risk of Losses
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: NOV 2015

PSAF – Nov 2015 – L2 – Q7 – Public Sector Reforms

Distinguish between basic infrastructure and development projects with examples and identify funding sources and characteristics.

Question

In order to achieve some development objectives, nations place emphasis on priority programmes like the provision of basic infrastructure and development projects, all of which require appropriate funding.

Required:

a. By means of specific relevant examples, distinguish between “basic infrastructure” and “development projects”. (3 Marks)

b. Discuss TWO development objectives which the priority programmes you refer to in (a) above are planned to achieve. (4 Marks)

c. Identify TWO sources of funding for these priority projects stating TWO distinct characteristics of each source identified and TWO factors that facilitate the commercial viability of the projects. (8 Marks)

Answer

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Tags: Basic Infrastructure, Development Projects, Funding, Public Finance, Viability
Level: Level 2

Topic: Public Sector Reforms
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q13 – Basic Management Functions

Identifying the term for superior performance relative to rivals.

Question

The appropriate term for anything that a firm does better especially when compared to rival firms is called:
A. Opportunities
B. Core competence
C. Performance
D. Competitive advantage
E. Capability

Answer

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Tags: Competitive Advantage, Core Competence, Strategy
Level: Level 1

Topic: Basic Management Functions
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q12 – Management, Individual, and Organisational Behaviour

Understanding the term related to perceived performance and rewards.

Question

The extent to which the individual perceives that effective performance will lead to desired rewards is described as:
A. Expectancy
B. Instrumentality
C. Valence
D. Perception
E. Productivity

Answer

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Tags: Expectancy, Motivation, Rewards
Level: Level 1

Topic: Management, Individual, and Organizational Behavior
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q11 – Basics of Business Finance and Financial Markets

Identifying the philosopher who propounded the virtue ethics theory.

Question

The virtue ethics theory was propounded by:
A. Immanuel Kant
B. Aristotle
C. Socrates
D. Plato
E. Hegel

Answer

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Tags: Ethics, Philosophy, Virtue
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q10 – Investment Decisions

Identifying the correct formula for calculating Net Present Value (NPV) of an investment.

Question

The formula for calculating Net Present Value (NPV) of an investment is:
A. Σₜ=₁ⁿ [(Cₜ / (1 + r)ᵗ)] – C₀
B. Σₜ=₀ⁿ [(Cₜ / (1 + r)ᵗ)] – C₀
C. Σₜ=₀ⁿ [(C₀ / (1 + r)ᵗ)] – C₀
D. Σₜ=₁ⁿ [(C₀ / (1 + r)ᵗ)] – C₀
E. Σₜ=₁ⁿ [(Cₜ / (1 + r)ᵗ)] + C₀

Answer

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Tags: Financial management, Investment, NPV
Level: Level 1

Topic: Investment Decisions
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q9 – Investment Decisions

dentifying what is NOT a feature of SWOT analysis.

Question

Which of the following is NOT a feature of SWOT analysis?
A. Strategic gap
B. Competitive threats
C. Opportunities availability
D. Weaknesses
E. Competitive advantage

Answer

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Tags: Business Planning, Strategy, SWOT Analysis
Level: Level 1

Topic: Basic Management Functions
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q8 – Investment Decisions

Identifying the spontaneous source of short-term finance.

Question

Which of the underlisted short-term finance sources can be regarded as a spontaneous source of short term fund?
A. Bank overdrafts
B. Accruals
C. Line of credit
D. Revolving credit agreement
E. Commercial paper

Answer

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Tags: Short-term Finance, Spontaneous Fund
Level: Level 1

Topic: Investment Decisions
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q7 – Nature of Business, Types, and Objectives

Identifying the incorrect statement about objectives.

Question

Which of the following statements is NOT true of objectives?
A. Specific
B. Measurable
C. Time bound
D. Relevant to the context of the vision of an organisation
E. Achievable within the undefined time frame

Answer

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Tags: Objectives, SMART, Time Frame
Level: Level 1

Topic: Nature of Business, Types, and Objectives
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q6 – Basic Management Functions

Identifying the term synonymous with management function.

Question

Management function is synonymous with:
A. Management process
B. Scientific management
C. Managerial roles
D. Managerial skills
E. Strategic management

Answer

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Tags: Management, Process, Roles
Level: Level 1

Topic: Basic Management Functions
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q5 – The Business Environment

dentifying what is not a characteristic of the business environment.

Question

Which of the following options is NOT a characteristic of the business environment?
A. Complexity
B. Dynamism
C. Multi-facets
D. Far-reaching impact
E. Predictability

Answer

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Tags: Business Environment, Characteristics, Predictability

Topic: The Business Environment
Series: NOV 2015

BF – Nov 2015 – L1 – SA – Q4 – Basic Management Functions

Identifying the exception among the advantages of decentralization.

Question

The following are advantages of decentralisation EXCEPT that it
A. Promotes development of general managers
B. Aids adaptation to fast-changing environment
C. Enhances a uniform policy
D. Relieves top management of some burden of decision making
E. Gives managers more freedom and independence in decision making

Answer

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Tags: Decentralization, Management, Policy
Level: Level 1

Topic: Basic Management Functions
Series: NOV 2015

Series: NOV 2015

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CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

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CSME – Nov 2015 – L2 – Q6 – Corporate Governance

Evaluates how specific corporate governance issues impact the effectiveness of a company's governance.

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CSME – Nov 2015 – L2 – Q5 – Corporate Governance

Outlines key responsibilities and duties of the board in corporate governance, relevant for improving corporate structure and performance.

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CSME – Nov 2015 – L2 – Q4 – Risk Management and Corporate Strategy

Analyzes strengths and weaknesses of Toyin Trust Insurance Plc pre- and post-2000 ownership changes, and suggests strategies for sustaining the company.

You're reporting an error for "CSME – Nov 2015 – L2 – Q4 – Risk Management and Corporate Strategy"

CSME – Nov 2015 – L2 – Q3 – Ethics in Business

Describes the nature of business and professional ethics, Kohlberg’s theory of moral development, and criticisms of the theory.

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CSME – Nov 2015 – L2 – Q2 – Risk Management and Corporate Strategy

Develops a risk management program for theft, diversion, and safety issues; includes risk reduction and financing techniques.

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CSME – Nov 2015 – L2 – Q1c – Corporate Governance

Discusses the difference between rules-based and principles-based professional ethics in accountancy.

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CSME – Nov 2015 – L2 – Q1b – Risk Management and Corporate Strategy

Discusses various methods for managing and controlling risks in an organization, illustrating different risk management techniques.

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CSME – Nov 2015 – L2 – Q1a – Risk Management and Corporate Strategy

Explains credit risk management concepts, including exposure, losses, residual risk, and appetite.

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PSAF – Nov 2015 – L2 – Q7 – Public Sector Reforms

Distinguish between basic infrastructure and development projects with examples and identify funding sources and characteristics.

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BF – Nov 2015 – L1 – SA – Q13 – Basic Management Functions

Identifying the term for superior performance relative to rivals.

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BF – Nov 2015 – L1 – SA – Q12 – Management, Individual, and Organisational Behaviour

Understanding the term related to perceived performance and rewards.

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BF – Nov 2015 – L1 – SA – Q11 – Basics of Business Finance and Financial Markets

Identifying the philosopher who propounded the virtue ethics theory.

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BF – Nov 2015 – L1 – SA – Q10 – Investment Decisions

Identifying the correct formula for calculating Net Present Value (NPV) of an investment.

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BF – Nov 2015 – L1 – SA – Q9 – Investment Decisions

dentifying what is NOT a feature of SWOT analysis.

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BF – Nov 2015 – L1 – SA – Q8 – Investment Decisions

Identifying the spontaneous source of short-term finance.

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BF – Nov 2015 – L1 – SA – Q7 – Nature of Business, Types, and Objectives

Identifying the incorrect statement about objectives.

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BF – Nov 2015 – L1 – SA – Q6 – Basic Management Functions

Identifying the term synonymous with management function.

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BF – Nov 2015 – L1 – SA – Q5 – The Business Environment

dentifying what is not a characteristic of the business environment.

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BF – Nov 2015 – L1 – SA – Q4 – Basic Management Functions

Identifying the exception among the advantages of decentralization.

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