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ACCA SBL: Strategic Business Leader Practice Questions
45 original practice questions for ACCA Strategic Business Leader (SBL), written for this site with full explanations. They are original questions in the style of the syllabus - not taken from any official exam. Note that the SBL exam itself is a case-study based paper answered through written professional tasks, so use these multiple-choice questions to test your grasp of the underlying concepts, not as a rehearsal of the exam format. Then confirm details against ACCA's official materials.
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In corporate governance, the agency problem refers to:
Correct answer: C. The agency relationship arises because shareholders (principals) entrust directors (agents) with running the company, and the agents may pursue their own interests, such as pay or empire building, at the owners' expense. Recruitment costs are an operational expense, disputes between shareholders are an ownership issue rather than an agency issue, and external audit is one mechanism used to reduce the agency problem, not the problem itself. -
The primary role of independent non-executive directors on a board is to:
Correct answer: A. Non-executive directors bring independent oversight: they scrutinise strategy, challenge executive proposals, monitor performance and staff the key board committees. They deliberately stay out of daily management, because involvement would compromise their independence; preparing financial statements is a management task overseen by the board; and their loyalty runs to the company and its shareholders, not to the executives they are meant to monitor. -
The board of a listed company proposes that its chief executive should also take on the role of board chairman. Governance codes generally discourage this arrangement because:
Correct answer: B. The chairman leads the board that is supposed to hold the chief executive to account, so combining the roles removes a key check and concentrates authority over both the agenda and execution in one person. The objection is about accountability rather than diary capacity, the effect on profit is unproven either way and not the governance argument, and there is no requirement for a chairman to work for a regulator. -
Best practice is for a listed company's remuneration committee to be made up of independent non-executive directors, primarily so that:
Correct answer: D. Allowing executives to decide their own remuneration is a direct conflict of interest, so the task is given to independent non-executives who can link pay to performance objectively. The aim is appropriate pay rather than minimal pay, shareholder votes on remuneration remain part of the accountability framework, and no committee can guarantee that targets will be achieved, only design incentives sensibly. -
A new investor in a listed company asks what its audit committee actually does. The best summary is that the committee:
Correct answer: A. The audit committee is a monitoring committee of non-executive directors: it reviews financial reporting judgements, oversees internal audit, and manages the appointment, independence and effectiveness of the external auditor. Management prepares the financial statements, so the committee reviewing its own preparation would defeat its purpose; sales targets are an executive matter; and appointing the chief executive and chairing the board belong to the nomination committee and chairman respectively. -
Compared with a unitary board, a two-tier board structure is characterised by:
Correct answer: C. In a two-tier structure the management board runs the business while a legally separate supervisory board appoints and oversees it, and membership of the two bodies does not overlap. A single combined board is the definition of the unitary model, two-tier systems in some countries actually give employee representatives seats on the supervisory board rather than excluding them, and the point of the structure is that executives, including the chief executive, do not lead the body that supervises them. -
A rail operator maps its stakeholders on a power and interest matrix. Its industry regulator has both high power and high interest in the company's decisions. The appropriate strategy is to:
Correct answer: B. High power combined with high interest places a stakeholder in the key player quadrant, where the recommended approach is close, continuous engagement and participation in relevant decisions. Keeping satisfied fits high power but low interest, minimal monitoring fits low power and low interest, and shareholding is irrelevant to stakeholder power, since a regulator can constrain strategy through licences and rules. -
A family-owned company is about to accept its first significant outside equity investor. The investor is concerned that decisions are taken informally by family members alone. Which governance change would most directly address this concern?
Correct answer: D. The investor's worry is informal, family-controlled decision making, and the direct remedy is structural: independent directors bring outside challenge, and formal committees with defined remits make decisions transparent and accountable. A higher dividend changes returns rather than control, relocation changes geography rather than governance, and expanding audit scope adds verification of numbers but does not change how decisions are made. -
A PESTEL analysis is used to:
Correct answer: B. PESTEL structures the analysis of the wider external environment, helping an organisation spot macro-level drivers of change such as regulation, demographics or technology shifts. Product profitability is examined through portfolio and margin analysis, internal controls are assessed through control frameworks and audits, and people decisions use appraisal and succession tools, none of which is the purpose of PESTEL. -
A components manufacturer sells most of its output to three large car makers, each of which could switch to alternative suppliers at little cost. In a five forces analysis, this situation indicates:
Correct answer: A. The manufacturer faces few, large, concentrated customers with low switching costs, which are the classic conditions for powerful buyers who can demand price concessions. Dependence on components in general does not reduce buyer power when each individual supplier is replaceable, and the scenario says nothing about entry barriers or the intensity of rivalry among existing component makers, so those conclusions cannot be drawn from it. -
A mid-market clothing retailer cuts prices to match discount chains while simultaneously investing in premium store fittings and designer ranges, without a cost advantage in either direction. In terms of generic competitive strategies, the retailer most risks:
Correct answer: C. Competing on price without the lowest cost base, while spending on premium positioning that discounting undermines, leaves the retailer without a clear source of advantage, the position described as stuck in the middle. Focus means concentrating on a narrow segment, not straddling two positions; hybrid strategies can work but only with genuine cost and differentiation advantages, which are absent here; and spending more on store fittings raises costs, the opposite of cost leadership. -
A grocery chain with a strong national position begins opening its existing store format in a neighbouring country. In Ansoff's growth matrix, this move is classified as:
Correct answer: D. The chain is offering an existing, proven format to a geographically new customer base, which is the definition of market development. Market penetration would mean growing share in the home market with the same offer, product development would mean new offers for existing customers, and unrelated diversification would involve both new products and new markets outside the current business, none of which matches simple cross-border expansion of the same format. -
In value chain analysis, which of the following is a support activity rather than a primary activity?
Correct answer: B. Procurement supports every primary activity by obtaining the inputs they need, which is why it is classified as a support activity alongside infrastructure, human resource management and technology development. Outbound logistics, marketing and sales, and service are three of the five primary activities, because they are directly involved in creating, selling and supporting the product offered to customers. -
A division operates in a fast-growing market but holds a small relative market share and consumes significant cash. In growth-share portfolio terms it is a question mark, and the essential strategic choice is between:
Correct answer: A. Question marks sit in attractive markets but lack the share needed to generate strong returns, so the decision is to fund a genuine push for share or to exit before further cash is consumed. Harvesting is the strategy for cash cows with strong share in mature markets, dogs combine low share with low growth, which is not this situation, and passive continued funding is the worst response because it drains cash without resolving the competitive position. -
A board evaluates a proposed acquisition. It fits the group's strategic direction and shareholders support the logic, but the deal would require debt the company cannot realistically service from its cash flows. Using the suitability, acceptability and feasibility framework, the proposal fails on:
Correct answer: D. Feasibility asks whether the organisation has the resources and capabilities, including funding capacity, to deliver the strategy, and unserviceable debt is a feasibility failure. Suitability is satisfied because the deal addresses the strategic position, acceptability concerns whether stakeholders find risk and return acceptable, and stakeholder support here suggests it is not the sticking point, so the conclusion that all criteria pass is wrong. -
For a capability to qualify as a core competence supporting sustainable competitive advantage, it should:
Correct answer: C. A core competence must deliver customer-perceived value, resist imitation and open access to more than one market, which is what makes the advantage durable and strategic. Accounting recognition is irrelevant to strategic value, dependence on one individual makes a capability fragile rather than embedded, and ease of replication is the opposite of the imitation barrier a core competence requires. -
An organisation's risk appetite is best defined as:
Correct answer: B. Risk appetite expresses, usually at board level, how much risk and what kinds of risk the organisation is prepared to take to achieve its goals, and it guides strategy and risk responses. Insurance premiums measure one mitigation cost rather than willingness to take risk, historical losses describe past outcomes rather than forward-looking appetite, and directors' liability rules are a legal matter unconnected to the concept. -
Using a likelihood and impact framework, how is a risk with low likelihood but very high impact, such as a catastrophic factory fire, typically managed?
Correct answer: D. Low-frequency, high-severity risks are the classic candidates for transfer, most obviously insurance, combined with business continuity planning because transfer compensates for loss rather than preventing it. Passive acceptance ignores an impact that could destroy the business, abandoning operations to avoid a remote risk is disproportionate, and no set of controls can reduce the likelihood of events like fire to zero. -
A chemicals company identifies that one small legacy product line carries a high likelihood of causing serious environmental damage, with correspondingly severe penalties, while contributing little profit. The most defensible risk response is to:
Correct answer: A. When likelihood and impact are both high and the activity generates little value, withdrawal is the rational response because the risk-return trade-off is clearly unfavourable. Treating probable environmental harm as a routine cost is commercially and ethically indefensible, environmental liabilities and regulatory penalties are typically difficult or impossible to insure away in full, and waiting for an incident abandons risk management altogether. -
Which set of items would you expect to find in a well-maintained risk register?
Correct answer: C. A risk register documents identified risks with their assessment, the mitigations in place and clear ownership so that someone is accountable for monitoring and action. Restricting it to crystallised risks would defeat its forward-looking purpose, asset listings belong in the accounting records, and directors' shareholdings are a disclosure matter, not risk register content. -
A retailer imports goods priced in a foreign currency and is exposed to movements in the exchange rate between placing orders and paying for them. This exposure is best classified as:
Correct answer: B. Currency exposure is a financial risk because it arises from movements in financial market prices and affects cash flows and reported results. Compliance risk concerns breaches of laws and regulations, reputational risk concerns damage to stakeholder perceptions, and strategic risk concerns threats to the business model and long-term positioning; a transaction-level exchange rate movement fits none of those categories as directly. -
The concept of risk velocity adds which dimension to a traditional likelihood and impact assessment?
Correct answer: D. Velocity measures how quickly consequences arrive after a risk crystallises, which matters because fast-moving risks, like a viral reputational story, leave little time to react and demand prepared responses. Organisational spread relates to impact breadth rather than speed, insurability affects the transfer decision, and owner seniority is a governance choice; none of these captures the time dimension that velocity adds. -
A board reviews its risk profile once a year, but the company operates in a market where technology, competitors and regulation change rapidly. Why is this annual approach increasingly seen as inadequate?
Correct answer: A. In fast-moving environments, a risk profile drawn up once a year is out of date long before the next review, so dynamic or continuous risk monitoring is needed for responses to stay relevant. Annual reviews are not prohibited, they are simply insufficient on their own; risks do not decay automatically and may compound if ignored; and risk management is a board responsibility, with external audit providing assurance rather than ownership. -
An internal control system is designed to provide:
Correct answer: B. Internal control supports three families of objectives - operations, reporting and compliance - and can only ever give reasonable assurance because of cost constraints, human error, collusion and management override. No system can guarantee the absence of fraud or error, the scope is far wider than tax accuracy, and controls exist to strengthen accountability, not to shield managers from it. -
In a small finance team, the same clerk sets up new supplier accounts, approves purchase invoices and runs the weekly payment file. The main control weakness is:
Correct answer: C. Authorisation, recording and custody functions are concentrated in one person, so a single individual could commit and conceal fraud through the entire purchase-to-pay cycle, which is precisely what segregation of duties prevents. The problem is too few people in the process rather than too many, documentation volume is not the issue described, and external audit is periodic assurance, never a substitute for day-to-day controls. -
To protect its independence, an internal audit function should report primarily to:
Correct answer: A. Internal audit reviews management's own activities, so its reporting line must run to the audit committee to protect it from pressure by those it audits and to give its findings weight at board level. Reporting to the finance director undermines independence because finance is a frequent audit subject, the external auditor is a separate assurance provider rather than a reporting line, and reporting to audited managers would be a direct conflict of interest. -
Which statement correctly distinguishes internal audit from external audit?
Correct answer: D. Internal audit serves the organisation itself, with a flexible scope across controls, risk and operational effectiveness set by the board or audit committee, whereas external audit is an independent statutory opinion on the financial statements addressed to shareholders. Internal audit is generally a governance expectation rather than a universal legal requirement while external audit is mandatory for many companies, internal auditors must be independent of the external firm to avoid conflicts, and external audit reporting is public, not private to management. -
Why does tone at the top matter so much to the effectiveness of internal control?
Correct answer: B. The control environment is the foundation of any control framework: if leadership signals that override, shortcuts or aggressive targets are acceptable, well-designed procedures below will be bypassed or ignored. Senior managers do not perform routine controls themselves, culture complements rather than replaces documented procedures, and regulators look at the whole control system, so the other options misread why leadership behaviour is decisive. -
A listed company is considering outsourcing its internal audit function to the firm that already performs its external audit. The strongest governance objection is that:
Correct answer: C. External audit routinely evaluates and may rely on internal audit work, so if both came from the same firm, the firm would be assessing itself, and the board would also depend on one provider for all assurance, weakening the system of checks. Outsourced providers are often highly competent, cost comparisons vary case by case, and outsourcing internal audit is lawful in many jurisdictions subject to safeguards, so the other objections are either false or overstated. -
A company introduces two new controls: system access rights that block unauthorised staff from raising purchase orders, and a monthly reconciliation of supplier statements to the purchase ledger. These are, respectively:
Correct answer: A. Access restrictions stop unauthorised transactions before they happen, which is the definition of a preventive control, while a reconciliation identifies errors or omissions after the fact, making it detective. Neither control fixes problems that have been found, so corrective labels do not apply, and a compensating control is an alternative control that mitigates a weakness elsewhere, which is not what either of these is doing. -
Under the fundamental ethical principles for professional accountants, integrity means:
Correct answer: D. Integrity requires honesty and straight dealing, including not being associated with information the accountant believes is false or misleading. Pursuing results at any cost invites dishonesty, confidentiality is a separate principle that itself has exceptions, and technical legal compliance while exploiting loopholes can still be dishonest, so none of the other options captures the principle. -
A professional accountant may disclose confidential employer or client information without consent when:
Correct answer: B. Confidentiality is not absolute: disclosure is permitted or required where the law demands it, such as reporting suspicions of certain crimes, or where a professional duty or right exists, for example in a regulatory investigation. Casual disclosure to a competitor's employee is a straightforward breach, using confidential information for personal gain also violates integrity and professional behaviour, and slow payment is a commercial dispute that never justifies breaching confidence. -
A finance manager is instructed by the chief financial officer to present deliberately optimistic cash flow forecasts to the company's bank in order to secure a covenant waiver. The manager believes the forecasts are misleading. The most appropriate first step is to:
Correct answer: C. The principles of integrity and professional behaviour prohibit association with misleading information, and the structured response is to challenge the instruction, escalate through internal governance channels, keep a record and refuse to present figures known to be misleading. A superior's instruction does not transfer ethical responsibility, secretly sending misleading figures then tipping off the bank compounds the problem, and immediate resignation abandons the issue without attempting resolution, making it a last resort rather than a first step. -
A manager approves expense claims strictly because that is what company policy and colleagues expect. In Kohlberg's framework of moral development, this reasoning sits at which level?
Correct answer: A. Acting to meet the expectations of peers and to uphold rules and order is the essence of conventional moral reasoning, the level at which most adults operate. Preconventional reasoning is driven by fear of punishment or hope of personal benefit, which is not what is described, postconventional reasoning appeals to principles beyond the rules and might even override policy, and Kohlberg treats rule-oriented conformity as genuine moral reasoning, just not the most developed kind. -
When applying a structured ethical decision-making model such as the American Accounting Association model, the first step is to:
Correct answer: D. Structured models begin by establishing what is actually known, because ethical issues, applicable norms and realistic options can only be identified once the facts are clear. Announcing a decision is the end of the process rather than the start, the models aim at sound judgement rather than allocating blame, and choosing the self-protective outcome contradicts the objectivity the frameworks are designed to support. -
A sales director argues that small facilitation payments to foreign officials are acceptable in a particular market because everyone there does it. This reasoning reflects:
Correct answer: B. Judging behaviour solely by local custom is ethical relativism, and it collides with the absolutist stance taken by anti-bribery legislation and corporate codes, which prohibit such payments wherever they occur. Absolutism is the opposite position, holding one standard everywhere; objectivity is about freedom from bias in professional judgement, not about excusing payments; and describing bribery as risk transfer misuses risk terminology to rationalise misconduct. -
In integrated reporting's six capitals model, which of the following is one of the six capitals?
Correct answer: A. The six capitals are financial, manufactured, intellectual, human, social and relationship, and natural capital, and organisations are encouraged to explain how their business model transforms each of them. Reputation is treated as an outcome that flows through social and relationship capital rather than a capital itself, regulatory capital is a banking solvency concept, and political capital is an informal expression, not part of the framework. -
An accountant posts derogatory comments about a client's staff on a personal social media account. Which fundamental ethical principle is most directly breached?
Correct answer: C. Publicly disparaging a client's staff is conduct that a reasonable observer would see as discrediting the profession, which is exactly what the professional behaviour principle prohibits. Competence and due care concern the quality of professional work rather than public conduct, confidentiality would only be engaged additionally if client information were revealed, and the principles extend to personal conduct with professional repercussions, so acting outside working hours is no defence. -
Lewin's three-stage model describes planned organisational change as:
Correct answer: D. Lewin's model starts by unfreezing, creating readiness and dissatisfaction with the status quo, then moving to new ways of working, and finally refreezing so the change becomes the new normal rather than sliding back. Plan-do-check belongs to quality improvement cycles, forming-storming-norming describes team development stages, and tell-sell-consult lists communication styles, none of which is Lewin's change sequence. -
Staff resist a new rostering system because they were not consulted and fear losing preferred shifts. Which approach is most likely to build genuine commitment to the change?
Correct answer: B. The resistance stems from exclusion and uncertainty, so participation and honest communication address its causes directly, and involvement tends to convert affected staff into contributors to the design. Coercion produces compliance at best and resentment at worst, indefinite delay leaves the underlying problem unsolved and signals weak leadership, and paying people while keeping them uninformed treats the symptom without removing the fear driving the resistance. -
A retailer buys an advanced analytics platform but changes nothing about its processes, decision rights or staff skills, and sees no measurable benefit. The most likely explanation is that:
Correct answer: A. Technology only creates value when the organisation redesigns how decisions are made, builds the skills to use the insights and adjusts ways of working, which is why transformation is an organisational programme rather than a procurement exercise. Blaming the vendor ignores the missing organisational change, retail is in fact a heavy and successful user of analytics, and more hardware spending would compound the underlying mistake instead of correcting it. -
In descriptions of big data, the characteristic of variety refers to:
Correct answer: C. Variety captures the range of data forms an organisation now handles, from neatly structured tables to free text, images, audio and sensor streams, which traditional systems struggle to combine. The number of tool vendors is a market observation, speed of generation and processing is velocity, and concerns about accuracy and trustworthiness relate to veracity, so the other options describe different characteristics. -
A board approves moving the company's core systems to a third-party cloud provider. From a governance perspective, the most important continuing concern is:
Correct answer: D. Outsourcing transfers activity but not accountability, so the board must keep oversight of how data is protected, what happens if the provider fails, and how the company could exit or switch provider without disruption. Subletting space and interface styling are minor operational details, and cloud adoption changes the shape of IT spending rather than eliminating it, since subscriptions, integration and oversight all continue to cost money. -
An employee with valid system access is deceived by a fraudulent email into transferring company funds to a criminal's account, despite the company's firewalls and access controls working as designed. This incident primarily demonstrates that:
Correct answer: A. Social engineering bypasses technology by manipulating people, so defences must combine technical controls with staff training, a questioning culture and procedures such as call-back verification for payment changes. The incident happened despite functioning technical controls, which disproves the idea that they remove the need for training; the access rights were legitimate and necessary for the employee's job; and the human channel of attack shows cyber risk is an organisation-wide issue, not an IT-only concern. -
Robotic process automation is best suited to processes that are:
Correct answer: B. Software robots follow defined rules, so they excel at stable, repetitive, high-volume tasks like rekeying data, reconciliations and standard report preparation, where they cut cost and error rates. Judgement-heavy work lacks the fixed rules a robot needs, rare and variable tasks cannot repay the cost of automating them, and a process must be documented and stable before its rules can be encoded at all.
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- Are these real ACCA SBL exam questions?
- No. These are original study questions written to test understanding of the syllabus. They are not real exam questions, exam dumps, or copied from any provider.
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- Answer each one, read the explanation (including why the wrong options are wrong), and use the per-area score below to focus your revision. Revisit before exam day.
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- Treat it as a concept check, not a full mock. Pair it with past papers and specimen exams from ACCA and approved content providers - the real paper also tests longer, applied question styles.
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