Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

108 A 
Merely rebranding a product is unlikely to reduce a company’s impact on its environment. 
The other three, however, should all help. 
109 B 
This is the official definition of sustainability. 
110 C 
Outsourcing is likely to increase the risk of security breaches as a third party will have 
access to Lannister’s systems. Outsourcing IT would be likely to mean the closure of 
Lannister’s own IT department, which will mean the loss of skilled staff. This will make it 
difficult for Lannister to bring IT back in-house in the future. In addition, such a move would 
be likely to cause a loss of competitive advantage as Lannister will have no way to create its 
own, unique systems. 
111 A – TRUE 
By not creating waste, an organisation is ensuring that resources are more likely to be 
available to future generations, improving sustainability. 
 
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ANSWERS TO PRA C TICE O BJECTIVE TEST QUESTIONS :
S EC T I O N 3
K APLA N PUBLISH ING
137 
COMPETITIVE FACTORS 
112 C 
Threat of substitutes refers to people’s tendency to replace one product with another. 
113 D 
The assessment will be in three steps, analysing how the firm can achieve a competitive 
advantage, the main competitive forces in the industry and how parts of the firm contribute 
to its competitiveness. 
114 B 
High fixed costs often mean that a business needs to ensure it sells a reasonable volume of 
its products in order to cover these fixed costs and become profitable. This need to 
maintain sales volume is likely to give customers higher power (the company will be keen to 
retain customers) and will increase competitive rivalry (the company will want to avoid loss 
of customers to rivals/will need to attract customers from rivals to maintain its volume). 
High fixed costs may also create a barrier to prevent new businesses from entering the 
market.