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Free ACCA Strategic Business Leader Practice Questions & Answers
300 exam-style Strategic Business Leader questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 271
What is the 'net present value' (NPV) of a project?
Select an option first.
Correct answer: B — The sum of all project cash flows (positive and negative) discounted to today's value at the required rate of return — with positive NPV indicating value creation
Explanation: B is correct. NPV = Sum of (Cash Flow / (1+r)^n) for all periods. A positive NPV means the project creates value above the cost of capital. NPV is the theoretically correct capital budgeting method because it considers time value of money and is additive across projects.
Question 272
What is 'internal rate of return' (IRR)?
Select an option first.
Correct answer: B — The discount rate at which the NPV of a project's cash flows equals zero — indicating the project's expected percentage return on investment
Explanation: B is correct. IRR is the break-even discount rate. If IRR exceeds the required rate of return (hurdle rate), the project is acceptable. It is useful for ranking projects but has limitations — it assumes reinvestment at the IRR, can give multiple solutions for unconventional cash flows, and ignores scale.
Question 273
What is a 'payback period' for a capital investment?
Select an option first.
Correct answer: B — The time required for the cumulative cash inflows from an investment to recover the initial capital outlay
Explanation: B is correct. Payback period is simple and widely used — it prioritises liquidity and risk (shorter payback = less exposure). However, it ignores time value of money and cash flows after the payback point. Discounted payback period addresses the first limitation. A, C and D are unrelated.
Question 274
What is 'sensitivity analysis' in project appraisal?
Select an option first.
Correct answer: B — A technique that tests how the project's NPV or other output changes when individual input assumptions (e.g., revenue, costs, discount rate) are varied, identifying which variables have the greatest impact
Explanation: B is correct. Sensitivity analysis shows which variables the project outcome is most sensitive to — focusing management attention on the most critical assumptions. It does not provide probabilities (that requires simulation or scenario analysis) but gives insight into project robustness. A, C and D are unrelated.
Question 275
What is 'benefit-cost ratio' (BCR)?
Select an option first.
Correct answer: B — The ratio of the present value of project benefits to the present value of project costs — with a BCR above 1.0 indicating that benefits exceed costs
Explanation: B is correct. BCR = PV of Benefits / PV of Costs. A BCR > 1 means the project creates net value. BCR is used for project prioritisation (higher BCR = better value per unit of cost) and is common in public sector investment appraisal. A, C and D are different ratios.
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Question 276
What is 'strategic investment appraisal'?
Select an option first.
Correct answer: B — The evaluation of major strategic investments using a combination of financial analysis (NPV, IRR, payback) and non-financial considerations (strategic fit, risk, capability development) to make holistic investment decisions
Explanation: B is correct. Strategic investment appraisal goes beyond pure financial analysis — strategic fit, competitive impact, option value, and risk must all be weighed alongside DCF analysis. A project with a marginally negative NPV may be strategically essential (e.g., to retain a key customer or develop a critical capability).
Question 277
What is 'real options analysis' in capital budgeting?
Select an option first.
Correct answer: B — An approach treating investment decisions as options — valuing the flexibility to expand, defer, abandon, or switch a project in response to future information, which traditional NPV analysis understates
Explanation: B is correct. Real options (to expand if successful, defer if uncertain, abandon if failing) have value — but DCF ignores this flexibility. In uncertain environments, the value of managerial flexibility can make apparently negative NPV projects worthwhile. A, C and D misuse 'real options'.
Question 278
What is 'integrated change control' in project management?
Select an option first.
Correct answer: B — The process of reviewing all change requests, evaluating their impact on scope, schedule, cost, and quality, and approving or rejecting changes through a formal governance process
Explanation: B is correct. Integrated change control ensures that proposed changes are properly evaluated before implementation — preventing ad hoc changes that undermine the project baseline. It involves a Change Control Board, impact assessment, and version-controlled documentation.
Question 279
What is 'value engineering' in product and project management?
Select an option first.
Correct answer: B — A systematic, structured approach to improving the value of a product or process by analysing its functions and finding ways to achieve them at lower cost without compromising quality or performance
Explanation: B is correct. Value engineering (VE) questions every design decision: is this feature necessary? Can the same function be achieved at lower cost? It is used in product design (e.g., target costing), construction projects, and process design. It differs from cost cutting by focusing on function preservation.
Question 280
What is 'organisational learning' and how does it create value?
Select an option first.
Correct answer: B — The process by which an organisation acquires, interprets, and applies knowledge from experience and the environment — improving its collective capabilities, performance, and adaptability over time
Explanation: B is correct. Organisational learning (Argyris, Senge) is embedded in processes, routines, systems, and culture — it is more than individual training. It enables the organisation to improve continuously, adapt to change, and avoid repeating past mistakes. A, C and D describe individual learning activities.
Question 281
What is a 'capability maturity model' (CMM)?
Select an option first.
Correct answer: B — A framework describing the stages of process maturity an organisation can achieve — from initial/chaotic (level 1) through managed, defined, quantitatively managed, to optimising (level 5) — guiding improvement
Explanation: B is correct. CMM (originally for software development, now applied broadly) helps organisations understand their current process maturity and what improvements are needed to advance. Higher maturity means more consistent, predictable, and continuously improving processes. A, C and D are different maturity concepts.
Question 282
What is 'strategic alignment' between IT and business?
Select an option first.
Correct answer: B — The degree to which IT strategy, capabilities, and investments support and enable the organisation's overall business strategy — ensuring technology delivers genuine business value
Explanation: B is correct. IT-business strategic alignment (Henderson and Venkatraman) is a persistent challenge — many organisations invest in technology without clear linkage to business value. Alignment requires governance, shared planning processes, and IT leadership that understands business strategy. A, C and D are narrower or operational.
Question 283
What is 'value stream mapping' (VSM)?
Select an option first.
Correct answer: B — A lean management tool that visually maps all the steps, information flows, and delays in a process from customer request to delivery — identifying waste and improvement opportunities
Explanation: B is correct. VSM (Toyota Production System-derived) shows both material and information flows, with timing data for each step. It distinguishes value-adding from non-value-adding steps, enabling focused waste elimination. A, C and D are different mapping tools.
Question 284
What is the 'theory of constraints' (TOC)?
Select an option first.
Correct answer: B — A management philosophy that focuses on identifying and systematically improving the single bottleneck (constraint) that limits an organisation's system throughput
Explanation: B is correct. Goldratt's TOC (The Goal) argues that every system has at least one constraint limiting its performance. The five focusing steps are: identify the constraint, exploit it, subordinate everything else to it, elevate it, and repeat. Improving non-constraints wastes resources. A, C and D are unrelated.
Question 285
What is 'design thinking' as an innovation approach?
Select an option first.
Correct answer: B — A human-centred creative problem-solving approach that deeply understands user needs, generates diverse ideas, prototypes rapidly, and iterates based on feedback
Explanation: B is correct. Design thinking (Stanford d.school, IDEO) involves five stages: Empathise (understand users), Define (frame the problem), Ideate (generate ideas), Prototype (build quickly), and Test (learn from feedback). It is applicable across business, policy, and product innovation. A, C and D are too narrow.
Question 286
What is 'corporate venturing' (corporate venture capital)?
Select an option first.
Correct answer: B — A corporate mechanism for investing in and supporting external startups or creating internal new ventures, enabling access to innovation and emerging technologies outside the main business
Explanation: B is correct. Corporate venturing enables large organisations to access entrepreneurial innovation without acquiring companies outright. It provides return on investment and option value (ability to acquire if successful). It balances the core business (exploitation) with new growth (exploration) — addressing the innovator's dilemma. A, C and D are unrelated.
Question 287
What is 'business model innovation'?
Select an option first.
Correct answer: B — Fundamentally changing how an organisation creates, delivers, and captures value — going beyond product or process innovation to rethink the entire logic of the business
Explanation: B is correct. Business model innovation (Osterwalder, Christensen) involves rethinking the customer value proposition, key activities, resources, partners, channels, customer relationships, cost structure, and revenue streams. Examples include Netflix (subscription streaming vs DVD rental) and Airbnb (platform vs hotel ownership). A, C and D are narrower innovations.
Question 288
What is a 'business model canvas'?
Select an option first.
Correct answer: B — A one-page strategic template with nine building blocks — customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure — describing how an organisation creates and delivers value
Explanation: B is correct. The business model canvas (Osterwalder and Pigneur) provides a visual, shared language for describing, analysing, and designing business models. It enables teams to understand and challenge all elements of how value is created. A, C and D are unrelated.
Question 289
What is a 'pitch' and why is communication skill important in strategy?
Select an option first.
Correct answer: B — A concise, persuasive communication presenting a strategic idea, proposal, or plan to an audience — often a board, investor, or senior stakeholder — requiring clarity, evidence, and narrative skill
Explanation: B is correct. In strategic contexts, excellent analysis alone is insufficient — leaders must communicate strategy persuasively to boards, investors, employees, and customers. Strong communication builds buy-in, alignment, and action. Poorly communicated strategy, however sound analytically, fails in execution. A, C and D misuse 'pitch'.
Question 290
What is a 'lessons learned' register in project management?
Select an option first.
Correct answer: B — A documented record of what went well and what went wrong during a project — captured during and after the project to improve future project performance
Explanation: B is correct. Lessons learned registers capture insights from both successes and failures, making them available to future project teams. They support organisational learning and continuous improvement of project delivery. Without systematic capture and use, organisations repeat the same mistakes across projects.
Question 291
What is a 'deliverable' in project management?
Select an option first.
Correct answer: B — A tangible or intangible output — product, service, result, or document — that must be produced by a project to meet its objectives
Explanation: B is correct. Deliverables are the outputs the project creates — software releases, constructed buildings, research reports, trained staff, or installed systems. The project scope is defined by its deliverables. A, C and D describe specific project documents or logistical activities.
Question 292
What is 'resource levelling' in project scheduling?
Select an option first.
Correct answer: B — Adjusting the project schedule to resolve resource overallocation — smoothing demand for resources over time to avoid peaks that exceed capacity, even if this extends the project duration
Explanation: B is correct. Resource levelling adjusts the schedule when resources are overallocated — delaying non-critical tasks to smooth resource demand. It may extend the project duration. Resource smoothing (a related technique) adjusts within float without extending the end date. A, C and D are unrelated.
Question 293
What is 'stakeholder mapping' and why is it done before and during a project?
Select an option first.
Correct answer: B — Identifying and analysing all individuals and groups who affect or are affected by the project — assessing their power, interest, and attitudes — to develop targeted engagement and communication strategies
Explanation: B is correct. Stakeholder mapping (using tools like the Mendelow matrix) ensures the right stakeholders receive the right level of engagement. Neglecting key stakeholders — especially powerful opponents — is a common cause of project failure. A, C and D describe narrower or unrelated mapping activities.
Question 294
What is a 'milestone' in project management?
Select an option first.
Correct answer: B — A significant event or decision point in the project schedule — marking the completion of a major phase or deliverable and often triggering a governance review
Explanation: B is correct. Milestones have zero duration — they are moments in time marking achievement of significant project goals. They provide governance checkpoints, trigger payments, and motivate teams. A and D are literal or mathematical definitions. C is a narrower use.
Question 295
What is 'people risk' in change management?
Select an option first.
Correct answer: B — The risk that the human dimensions of change — resistance, capability gaps, low engagement, leadership failure, or cultural misalignment — will prevent the change from being successfully implemented
Explanation: B is correct. People risk is consistently cited as the primary reason change initiatives fail. Even technically sound changes fail when people do not understand, accept, or have the capability to implement them. Change management exists specifically to address people risk. A, C and D are specific legal or financial risks.
Question 296
What is 'business value' in a project and programme management context?
Select an option first.
Correct answer: B — The net positive outcome delivered to the organisation and its stakeholders — including financial returns, improved capabilities, reduced costs, enhanced reputation, or strategic positioning
Explanation: B is correct. Business value is why projects are undertaken — they must deliver tangible and intangible benefits to the organisation. Financial return is one component, but value also includes capability development, risk reduction, regulatory compliance, and strategic positioning. A, C and D are too narrow.
Question 297
What is a 'project management office' (PMO)?
Select an option first.
Correct answer: B — A centralised function that standardises project governance, provides support and guidance, maintains project management methodology, and gives management visibility over the portfolio of projects
Explanation: B is correct. PMOs vary from supportive (providing tools and templates) to controlling (mandating standards) to directive (directly managing projects). They improve consistency, reduce duplication, and enable portfolio-level decision-making. A is physical location. C and D are specific roles within project governance.
Question 298
What is 'organisational ambidexterity' in practice?
Select an option first.
Correct answer: B — Structurally or contextually creating the capacity to both exploit existing capabilities efficiently (sustaining current performance) and explore new opportunities (building future capabilities) simultaneously
Explanation: B is correct. Ambidextrous organisations (O'Reilly and Tushman) achieve this through structural separation (separate units for exploration vs exploitation), contextual ambidexterity (individual choice of where to focus based on context), or sequential ambidexterity (switching focus over time). Most organisations fail because exploitation always crowds out exploration in resource allocation decisions.
Question 299
What is 'horizon scanning' in strategic planning?
Select an option first.
Correct answer: B — A systematic process of identifying emerging trends, developments, and signals of change that may affect the organisation in the medium to long term — enabling early strategic response
Explanation: B is correct. Horizon scanning monitors weak signals across political, economic, social, technological, legal, and environmental domains to identify opportunities and threats before they become obvious. It informs strategic planning by expanding the range of futures considered. A, C and D are unrelated.
Question 300
What is 'change impact assessment'?
Select an option first.
Correct answer: B — A structured analysis of the effects a proposed change will have on people, processes, systems, and structures — identifying who will be affected, how, and to what extent — to guide change management planning
Explanation: B is correct. Change impact assessment identifies all affected stakeholder groups and the nature of the impact on each — enabling targeted training, communication, and support plans. Without it, change programmes underestimate the human dimension and fail to prepare adequately. A, C and D are narrower.
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