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

4 months 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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Kathrine

3 months ago

That's true, but they may not have the same level of expertise in dealing with the P$ market as a company based in country P.

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Giuseppe

3 months ago

But what about option D? A company based in country P with customers in country M could also be a good fit.

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Sherita

3 months ago

I agree, it would make the transition smoother for MAN.

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Leonida

3 months ago

Option B sounds like a solid choice. They already have experience with the P$ market.

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Kattie

4 months 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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Stefany

3 months ago

B: I agree, it's important to consider the stability and compatibility of the customer bases when expanding internationally.

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Zita

3 months ago

A: Yeah, Option D sounds like a risky move. Mixing currencies and customer bases like that could lead to a lot of complications.

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Gaston

4 months 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

4 months 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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