ACCA BT · Chapter 2
Stakeholders and the external environment MCQs with Answers
11 multiple-choice questions on Stakeholders and the external environment for ACCA BT Business and Technology. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
Which of the following is an internal stakeholder of a company?
- A) Its bank
- B) Its employees
- C) Its customers
- D) The local community
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Answer: B) Its employees
Internal stakeholders are those inside the organisation, such as employees and managers. Banks and customers are connected stakeholders, having a contractual or economic relationship with the organisation, and the local community is an external stakeholder.
Question 2
Using Mendelow's matrix, a stakeholder group has high power but low interest in a proposed project. What strategy should management adopt towards this group?
- A) Keep satisfied
- B) Manage closely as a key player
- C) Keep informed
- D) Minimal effort
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Answer: A) Keep satisfied
Mendelow's matrix plots power against interest. High power with low interest calls for keeping the group satisfied so that it does not become interested and use its power against the project. High power and high interest are key players, low power and high interest should be kept informed, and low power with low interest needs minimal effort.
Question 3
A government environmental regulator has significant power over a proposed new chemical plant and has publicly stated it will scrutinise the plans closely. Under Mendelow's matrix, how should the company treat the regulator?
- A) As a group to keep satisfied, with information provided only if requested
- B) As a key player whose views must be considered and managed closely
- C) As a group to keep informed, since it cannot stop the project
- D) As a low-priority group requiring minimal effort
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Answer: B) As a key player whose views must be considered and managed closely
The regulator has high power (it can block or condition the project) and has shown high interest by announcing close scrutiny. High power and high interest place it in the key player quadrant, so its views should be actively considered and managed. Keeping it merely satisfied would underestimate its expressed interest.
Question 4
In a PESTEL analysis, a change in the age structure of a country's population would be classified under which heading?
- A) Political
- B) Economic
- C) Technological
- D) Social
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Answer: D) Social
Demographic factors such as age structure, birth rates and household composition are social factors in a PESTEL analysis. Political factors concern government stability and policy, economic factors concern items such as growth, inflation and interest rates, and technological factors concern innovation and new processes.
Question 5
New legislation imposes binding limits on the carbon emissions that a company's factories may produce, which will require expensive changes to its plant. In a PESTEL analysis, the emission limits themselves are best classified under which headings?
- A) Environmental and legal
- B) Social and economic
- C) Technological only
- D) Social and technological
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Answer: A) Environmental and legal
The limits concern the natural environment (pollution and climate change) and are binding because they are imposed by legislation, so they fall under the environmental and legal headings. The policy debate that led to the law has a political dimension, but the stem asks about the binding limits themselves. They are not social factors, and although the company may need new technology to comply, the limits are not a technological factor in themselves.
Question 6
Which of the following is NOT one of Porter's five competitive forces?
- A) The threat of new entrants
- B) The bargaining power of suppliers
- C) The threat of substitute products
- D) The power of the government
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Answer: D) The power of the government
Porter's five forces are the threat of new entrants, the threat of substitutes, the bargaining power of customers, the bargaining power of suppliers and competitive rivalry. Government is not one of the five forces, although government policy can affect each force, for example by creating barriers to entry.
Question 7
Which of the following is most likely to INCREASE the bargaining power of a company's suppliers?
- A) There are many suppliers offering an identical product
- B) The company buys a large proportion of each supplier's output
- C) The company would incur high costs if it switched to a different supplier
- D) The company could easily make the component itself
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Answer: C) The company would incur high costs if it switched to a different supplier
High switching costs lock the buyer in and strengthen the supplier's position. Many suppliers of an identical product, a buyer that takes a large share of suppliers' output, and a credible threat of backward integration by the buyer all reduce supplier power.
Question 8
A new business wishes to enter an industry where existing firms enjoy large economies of scale, strong brand loyalty and exclusive access to distribution channels. In terms of Porter's five forces, what does this indicate?
- A) Low barriers to entry, so the threat of new entrants is high
- B) High competitive rivalry, so profitability is low
- C) High buyer power, so prices are likely to fall
- D) High barriers to entry, so the threat of new entrants is low
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Answer: D) High barriers to entry, so the threat of new entrants is low
Economies of scale, brand loyalty and control of distribution channels are classic barriers to entry. High barriers make it difficult for newcomers to enter, so the threat of new entrants is low, which tends to protect incumbent profitability. The scenario says nothing directly about rivalry levels or buyer power.
Question 9
In Porter's value chain, which of the following is classified as a primary activity?
- A) Procurement
- B) Human resource management
- C) Outbound logistics
- D) Technology development
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Answer: C) Outbound logistics
The primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. Procurement, human resource management, technology development and firm infrastructure are support activities that assist the primary activities.
Question 10
A furniture retailer offers free assembly and a five-year repair service after delivery. In Porter's value chain, which primary activity does the repair service fall under?
- A) Outbound logistics
- B) Marketing and sales
- C) Operations
- D) Service
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Answer: D) Service
Service covers activities that maintain or enhance a product's value after sale, such as installation, repair and after-sales support. Outbound logistics concerns storing and distributing the finished product to the customer, marketing and sales concerns persuading customers to buy, and operations converts inputs into the final product.
Question 11
Which of the following stakeholder groups is generally regarded as having the primary objective of maximising the long-term value of their investment in a company?
- A) Shareholders
- B) Employees
- C) Suppliers
- D) Customers
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Answer: A) Shareholders
Shareholders invest capital and normally seek to maximise the value of that investment through dividends and share price growth. Employees seek pay, security and good conditions, suppliers seek regular orders and prompt payment, and customers seek quality products at fair prices.