CIMA Exam CIMAPRA19-F03-1 Topic 7 Question 105 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 105
Topic #: 7

MAN is a manufacturing company that is based in country M and sells almost exclusively to customers in country M, priced in the local currency, M$.

MAN wishes to expand the business by acquiring a company that manufactures similar products but has a more global customer base. It is particularly interested in selling to customers in country P, which uses currency P$ but recognises that the P$ is generally quite volatile against the M$.

Country P uses the same language as country M, has free entry of labour from country M,no exchange controls or withholding tax and a favourable double tax treaty.

Which of the following companies would be most suitable takeover candidates for MAN to investigate further?

AA company based in country M with a global customer base including country P.

BA company based in country P with a global customer base including country P.

CA company based in country M with a shared interest in selling in country P.

DA company based in country P with a large proportion of customers in country M.

Show Suggested Answer

Suggested Answer: A, B, D

by Miesha at Jan 26, 2025, 12:40 AM

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Erasmo

13 days ago

Option B looks pretty good to me. A company based in country P with a global customer base, including country P, would already have the necessary expertise to navigate the P$ market. Plus, they'd have the language and cultural similarities to work well with MAN.

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Kattie

17 days ago

Haha, Option D is just asking for trouble. A company based in country P with a large proportion of customers in country M? That's like trying to mix oil and water!

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Gaston

19 days ago

I don't know, I'm leaning towards Option C. A company based in country M with a shared interest in selling in country P could be a good fit, and they'd already have some local knowledge and connections.

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Johnson

21 days ago

Option A seems like the obvious choice here. A company based in country M with a global customer base, including country P, would have the necessary experience and infrastructure to help MAN expand into the P$ market.

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