KMPG-Classical 36 Verbal

Classcical 36 Verbal Questions Example Individuals who are responsible for databases that hold information about people are now bound by the Data Protection Act (PDA). This Act covers any information stored on a computer that identifies a living individual. Companies holding such information must, under the Terms of the Act, make sure that they take ‘adequate care’ of the data, both technically and in terms of the behaviour of the organisation. The personal data stored has to be protected from loss, destruction or damage. Example 1. Any information stored about a named individual currently working for an organisation is subject to the Data Protection Act. Example 2. As long as any data about a named individual is managed in a technically adequate way, there are no other restrictions as to how it can be used or handled. Example 3. Damage to data held about named individuals represents the biggest threat to its proper management. Example 4. Data about named individuals who have left a company is not subject to the Act. Section A Competitor analysis involves the examination of competitors in order that the planner can develop and sustain superior competitive performance for the organisation. This statement belies the fact that in order to do this one must first establish from where the competition currently stems and from where it might stem in the future. One also has to consider and appraise competitors’ present and likely future objectives and strategies, and their likely reactions to the competitive moves that an organisation might make. 1. Planners can only sustain superior performance for their organisation by doing competitor analysis. 2. Effective competitor analysis involves looking into the future. 3. It is easier to establish where competition currently stems from, rather than where it might stem from in the future 4. It is not always apparent to organisations who their competitors are. Section B The model of consumer behaviour on which neo-classical demand theory is based implies that consumers are perfectly informed about the price and quality characteristics of the products on offer, and are constantly altering their expenditure patterns in response to price and quality changes, so as to maximise their total ‘utility’(satisfaction). This model is unrealistic, as the range of products on offer in modern markets is immense, and no consumer has the knowledge or inclination to acquire the information that would be needed to make choices in this way. 5. Being up to date with product information plays little part in neo-classical demand theory. 6. Neo-classical demand theory is only one of a number of models of consumer behaviour. 7. There are some consumers who are perfectly informed about the price and quality characteristics of products on offer. 8. Maximising the total utility of a product purchase implies consideration of both price and quality characteristics Randall at kpmg Classcical 36 Verbal Questions Section C The business of the Company shall be managed by the directors who, subject to the law, the memorandum and articles of association, and any direction given by special resolution, may exercise all the powers of the company. The minimum number of directors is two; there is no maximum number. The directors, or the company by special resolution, may appoint as a director any person who is willing to act as a director, provided he or she is not a bankrupt or disqualified from acting as a director under the Insolvency Act. Directors need not hold shares in the company, but normally they will be required to hold at least a specific minimum shareholding. 9. New directors tend to be appointed by existing directors rather than by special resolution. 10. The Company cannot operate with only one director. 11. Individual bankruptcy is governed by the Insolvency Act. 12. There is no upper limit to the number of shares any director can hold. Section D In most organisations, conflict between groups is quite common. Organisations usually develop differences between functional groups, such as sales and manufacturing, as a means of responding to diversity and uncertainty in their particular environment. Manufacturing must organise for stability and efficiency while sales must organise to relate to and service customers. To accomplish these diverse tasks, sales must hire different people from manufacturing, and each must manage its people in accordance with their unique expectations and the functions’ task requirements. If such differences did not exist, neither group could get its job done effectively. 13. Functional groups within a single organisation are not subject to different forms of uncertainty. 14. Conflict between groups is the inevitable result of functional groups having to respond to their own unique environments. 15. Manufacturing and sales are unlikely to have the same goals and expectations. 16. The reality of functional differences does mean that different groups cannot operate effectively. Section E Unless companies have some knowledge of buyer behaviour, they would be unaware of and unfamiliar with the complex range of behavioural factors that impinge upon purchasing behaviour. The truth is that, like much of human behaviour, purchase behaviour is complex and multi-faceted. Even the ‘simplest’ of purchasing decisions is an amalgam of behavioural forces and factors of which even the purchaser may not be aware. However, even though consumer behaviour is a complex subject marketing planners should at least have some understanding of it. Marketers are specifically interested in the behaviour associated with groups or segments of consumers as it would be impossible to serve the exact needs and wants of specific individuals in a market and remain profitable. 17. The purchasing behavior of consumers is unpredictable. 18. Even if one could predict the behaviour of an individual buyer, it would not be profitable for marketers to try to do so. 19. Some consumer groups exhibit more complex behaviour than others do. 20. Purchase behaviour is not subject to the same whims as other aspects of human behaviour. Randall at kpmg Classcical 36 Verbal Questions Section F When any company moves from a sales to a marketing approach, it is not just a case of re-titling the Sales Director as Marketing Director and doubling the advertising budget. It requires a complete reorientation in thinking and a revolution in how a company organises and practises its business activities. Whereas selling focuses on the needs of the seller, marketing focuses on the needs of the buyer. Whereas selling is preoccupied with the seller’s need to convert his or her product into cash, marketing is preoccupied with the idea of identifying and hence satisfying the needs of the customer. However, subscribing to a philosophy of marketing, even though an important first step, is not the same as putting that philosophy into practice. 21. Advertising budgets are normally doubled when a company moves over to a marketing approach. Section G The corporate mission statement needs detailed consideration by top management to establish the business the company is really in and to relate this consideration to future business intentions. It is a general statement that provides an integrating function for the business, from which a clear sense of business definition and direction can be achieved. By formulating a clear business statement, boundaries for the ‘corporate entity’ can be conceived in the context of wider environmental trends that influence the business. This stage is often overlooked in marketing planning, and yet without it the marketing plan will lack a sense of contribution to the development of the total business. 22.The boundaries of a corporate entity can only be assessed in the context of wider environment trends. 23.A corporate mission statement enables top management to define the future direction of a business. 24.Marketing planning does not often take account of the corporate mission statement. 25. Different functions within a business are likely to interpret the mission statement in different ways. Section H The adoption and application of performance management methods requires many different changes in behaviour and attitudes up and down the organisation. These methods are not merely techniques; they are ways of life and a philosophy of management. Thus the introduction of performance management systems must come as part of an organisation’s commitment to change its culture. Only top management commitment to a new way of managing, often triggered by a crisis, can support such a massive undertaking. 29. The support of top managers is essential in changing organisational culture. 31. Using performance management systems for the first time requires minimal adaptations on the part of the organisation concerned. 32. The adoption of performance management methods of itself will create changes in behaviour and attitudes. Section I The ‘prudence rule’, which is sometimes known as conservatism, arises out of the need to make a number of estimates in preparing periodic accounts. Managers and owners are often naturally overoptimistic about future events. As a result, there is a tendency to be too confident about the future, and not to be altogether realistic about the organisation’s prospects. There may, for example, be undue optimism over the credit-worthiness of new customers. Insufficient allowance may therefore be made for the possibility of bad debt. In turn, this might have the effect of overstating profit. Randall at kpmg Classcical 36 Verbal Questions 33. Accountants should avoid making estimates when preparing periodic accounts. 34. Most new customers are credit-worthy. 35. Managers or owners are not often good judges of their customers’ willingness or ability to pay. 36. The ‘prudence rule’ prevents bad debt from arising. Section J A partnership is presumed to exist when two or more people get together in business with the objective of making a profit. The law limits the total number of people who may get together to form a partnership. Apart from a few exceptions, such as firms of accountants and solicitors, a partnership may not consist of more Than 20 partners. The partnership will be managed by general agreement among the partners, but if there is no apparent agreement either formal or informal, then it is presumed that the partnership will operate in accordance with the Partnership Act, 1890. This Act lays down arrangements for dealing with such matters as the amount of capital to be contributed, the management of the business, and the division of the profits or losses among the partners. 37. Some agreement must exist between partners as to the way they manage the partnership. Section E The amount of accounting information that could be supplied to any interested party is practically unlimited. The information needs to be designed in such a way that it meets the objectives of the specific user group. If too much information is given, the user might think that it is an attempt to mislead them, and as a result all of the information may be totally rejected. In this context, accountants try to present accounts in such a way that they represent ‘a true and fair view’. The Companies Act, 1985, for example, requires company accounts to reflect this particular criterion, and it is advisable to apply it to all organisational entities. Unfortunately the Act does not define what is meant by ‘true and fair’, but it is assumed that accounts will be so if an entity has followed the rules laid down in appropriate accounting and financial reporting standards. 19. It is a positive feature of the Companies Act, 1985, that it does not define what is meant by ‘true and fair’. 20. In practice, the proper application of accounting and financial reporting standards ensures that accounts meet the criteria of being ‘true and fair’. Section F The style that individual managers choose to adopt depends in no small part on how they regard their subordinates. At one extreme, some will assume that the average employee has an inherent dislike of work and will avoid it if they can. They believe employees need to be controlled, directed, offered rewards or threatened with punishments to get them to make adequate efforts towards the achievement of organisational goals. On the other hand, some will take the view that, according to the conditions, work can be a source of satisfaction or dissatisfaction. Employees are not seen as naturally passive, or resistant to organisational objectives, but have been made so by experience. The most significant reward that can be offered employees is the satisfaction of their need for personal growth and self-development 21. Using rewards and punishments is a necessary part of organisational life. Randall at kpmg