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E3 E3 Strategic Management Questions and Answers

Questions 4

Which of the following is NOT included in the Information Systems Strategy (ISS) of Earl's three levels of information strategy?

Options:

A.

Division / SBU / Function based

B.

Business-focused

C.

Management-focused

D.

Demand-orientation

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Questions 5

BCD manufactures a well known breakfast cereal, the 'Weetyflake'. As a result of a steady slow down in the market growth of this product in its home country in the last five years, BCD is considering a number of possible strategic directions.

Select the label which best describes each of the strategic directions being considered by BCD.

E3 Question 5

Options:

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Questions 6

Which of the following distinguishes a learning curve effect from a learning Organization?

Options:

A.

Learning curve effects depend on repetition of the same behaviour. Learning Organizations seek to modify behaviour.

B.

Learning curve effects apply to the factory. Learning Organizations are always service industries.

C.

Learning curve effects increase with time. Learning Organizations cease to learn after a time.

D.

Learning curve effects always reduce costs. Learning Organizations always increase costs.

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Questions 7

Johnson, Scholes and Whittington developed the SAF framework to explain the factors that should be considered before pursuing a strategic option.

 

JJJ is a listed company that is considering launching a new product into its market.

 

Which of the following considerations affects the Acceptability of this new product launch?

Options:

A.

The potential impact of the launch of the new product on the profitability of JJJ.

B.

The availability of funds within JJJ for launching the new product.

C.

The amount of production capacity JJJ will require to make the new product.

D.

Whether the product is consistent with the strengths of JJJ.

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Questions 8

CCC is a charity which has an excellent reputation within its home country. CCC employs over 300 highly experienced staff and also has 200 skilled volunteers. Its funding mainly comes from donations from the public but its public profile is low compared to larger, more publicised charities.

 

Due to the recent recession, public donations to CCC have fallen in the last five years, but demand for its services continues to grow.

 

The government of the country in which CCC operates is encouraging greater collaboration between charities and there have been several recent successful mergers within the charity sector. CCC has recently been approached by a high profile and well funded charity, PPP, with a proposal to merge. PPP offers complementary services to those offered by CCC.

 

Which TWO of the following factors would most likely be considered as an 'opportunity' for CCC?

Options:

A.

The excellent reputation of CCC

B.

Growing demand for its services

C.

Merging with PPP.

D.

Highly experienced staff

E.

Donations from the public

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Questions 9

ZZZ is a retailing Organization that is suffering falling market share and falling profits.

 

ZZZ has a new Chief Executive Officer (CEO) who is urgently setting up a strategic performance evaluation system. This will involve identifying Critical Success Factors (CSFs) and then monitoring Key Performance Indicators (KPIs).

 

Advise the CEO which of the following statements is suitable for the role that a Chartered Global Management Accountant should undertake.

Options:

A.

Identify CSFs, develop KPIs, and report on ZZZ's performance against them.

B.

Help strategic management to clarify CSFs then develop KPIs, and report on ZZZ's performance against them.

C.

Develop KPIs from a range of external data and report on ZZZ's performance against them.

D.

Act as a change leader in developing the strategic performance evaluation system.

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Questions 10

QWE is a private company belonging to a famous former sports professional. It operates gyms and fitness clubs across its home country. Each gym or fitness club is treated as a profit center and the manager of each center is paid bonuses based on its financial performance.

QWE introduced multidimensional performance measures into its management control systems 3 years ago. These measure competitiveness, financial performance, capacity utilization, innovation and the flexibility of its centers to cope with changing demands.

The managers of QWE's centers have been leaving at a very high rate over the last 2 years. They have claimed that the measures are too open to interpretation and when they think they are improving their center's performance they are told they are doing the wrong things. They also complain that the managers in the centers near big cities find it much easier to reach their targets than the managers of other centers.

According to Fitzgerald and Moon's Building Block model, where does the problem lie?

Options:

A.

Standards and Rewards

B.

Standards, Dimensions and Rewards

C.

Dimensions and Standards

D.

Dimensions and Rewards

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Questions 11

'Big Data' is defined as 'Data sets so large and complex that it becomes difficult to process using traditional data processing applications'. Which of the following is NOT a stage in the use of Big Data?

Options:

A.

Capture

B.

Storage

C.

Analysis

D.

Sharing

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Questions 12

An organisation which exists in a fast-changing industry with managers who dislike formal planning would be best suited to using which of the following strategy models?

Options:

A.

Rational model

B.

Logical incrementalism

C.

Freewheeling opportunism

D.

Emergent approach

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Questions 13

LLL is a global passenger airline that needs to invest in a new fleet of aircraft to operate on its routes. There are several types of aircraft to choose between. The new aircraft will have an operating life of 25 years with LLL and therefore management is keen to make the correct decision.

 

There are several uncertainties that make it difficult for LLL to make this investment decision. Aircraft engine technologies are changing and some manufacturers are developing engines that propel aircraft at much higher speeds, whilst others are developing slower engines that minimise emissions. Concern over global warming is leading governments in some countries to impose heavy taxation on airlines that operate aircraft that have high emissions. The demand for air travel is also changing due to changing income levels between emerging and mature economies as well as the increased use of telecommunications to replace face to face meetings.

 

Which THREE of the following techniques would you recommend to help LLL make this investment decision?

Options:

A.

Scenario planning

B.

Morphological analysis

C.

Cross impact analysis

D.

Porters 5 Forces

E.

Brainstorming

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Questions 14

Which of the following is NOT a use of the Value Chain?

Options:

A.

Give managers a deeper understanding of precisely what their Organization does.

B.

Implement changes to protect key processes.

C.

Identify the key processes within the business that add value to the end customer.

D.

Identify the non-value added processes.

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Questions 15

Which of the following is NOT a fundamental principle specified in CIMA's Code of Ethics?

Options:

A.

Integrity

B.

Objectivity

C.

Confidentiality

D.

Sustainability

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Questions 16

As a recently qualified accountant, you have been given responsibility for delivering an ambitious project to centralise and computerise the accounts function within a geographically dispersed, medium-sized business. In addition, the reporting timetable requires the project to be delivered within a very short timescale with limited resources. You have decided to put together a team to deal with these proposed changes.

 

Which THREE of the following statements regarding effective Teams and Change are correct?

Options:

A.

Individuals must become more than they were when working alone and must develop new commitments and behaviours.

B.

Teams that cross departmental boundaries can develop new performance criteria.

C.

Teams that cross departmental boundaries can destroy shared values.

D.

Teams should continue after their purpose has been served.

E.

Teams play minor roles in institutional change.

F.

Teams enhance learning and address change directly through creating recommendations and new ideas.

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Questions 17

A grocery store has analysed its recent sales and identified that customers who purchased fresh strawberries also purchased ice cream at the same time in 65% of transactions.

 

Which of the following best describes the results identified in the analysis carried out by the grocery store?

Options:

A.

Sequencing

B.

Association

C.

Clustering

D.

Classification

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Questions 18

Which of the following is an example of a value adding activity within the outbound logistics aspect of an Organization's value chain?

Options:

A.

Refunds offered to customers if they are dissatisfied with a purchase.

B.

Promotions and discounts offered to loyal customers.

C.

Delivery of customers' purchases directly to their homes.

D.

Regular training provided to staff in customer care.

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Questions 19

M has been appointed as an external change agent to lead and implement a large scale re-structuring strategy which is being undertaken by a large bank. M has been appointed due to his extensive experience in a wide range of organizational re-structuring programmes. This re-structuring strategy will involve a large number of redundancies and the implementation of a new organization-wide management reporting system. M will need to work with staff from all departments and levels of the organization. The Board of Directors of the bank believes that an external change agent will bring more benefits to the change process than using an internal change agent.

Which of the following are the most likely benefits that could be achieved by the bank by appointing an external change agent to lead and implement the re-structuring strategy? (Choose all that apply.)

Options:

A.

The change process should be less costly if an external change agent is appointed.

B.

The bank can exploit the specialist expertise of the external change agent.

C.

As a dedicated resource, the external change agent can give more time to the change process.

D.

The external change agent will be more objective in decision-making than an internal change agent.

E.

The external change agent will have better relationships with the bank employees than an internal change agent.

F.

The speed of delivery of the change process will be quicker when using an external change agent.

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Questions 20

Which of the following is a direct external change trigger?

Options:

A.

A powerful competitor forcing an Organization to cut its prices.

B.

A general increase in the use of the Internet by society.

C.

The introduction of new environmental protection policies by the government.

D.

An economic recession in an Organization's home country.

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Questions 21

Which of the following uses apply to Porter's Value Chain?

 

Select ALL that apply.

Options:

A.

Gives managers a deeper understanding of precisely what their Organization does.

B.

Helps assess the markets that the company currently operates in.

C.

Identifies key processes that add value to the end customer.

D.

Assesses improvements to management information.  

E.

Prioritises operations that transform the various outputs into the final product.

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Questions 22

YYY is a profit-seeking provider of television channels. It broadcasts to some 55 countries using satellite and cable technologies. It also commissions and produces about 30% of the programs it broadcasts, to give it a unique competitive advantage against other broadcasters.

 

Web 2.0 provides new opportunities for YYY and it has developed a strong social media component to its programming schedules to increase audience engagement.

 

Keeping YYY's divisions working together is crucial to its success as a business.

 

Which of the following methods of divisional Performance Measurement would you recommend to YYY? 

Options:

A.

Kaplan and Norton's Balanced Scorecard

B.

Lynch and Cross's Performance Pyramid

C.

Stern Stewart's Economic Value Added (EVA)

D.

Rappaport's Shareholder Value Analysis (SVA)

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Questions 23

MMM is a large national bank. MMM has developed a vision statement which states that it aims to:  

   • Provide superior returns to our shareholders

   • Offer customers the best financial products on the market

   • Continuously train and develop our staff

   • Continually improve our business processes by utilising the latest information technology

 

Which of the following would be an appropriate performance measure within a Balanced Scorecard for MMM?

Options:

A.

Reduction in staff numbers to increase profit levels.

B.

Undertake customer satisfaction surveys.

C.

Number of training days per member of staff.

D.

Ensure that all IT equipment used is not more than two years old.

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Questions 24

Mendelow developed a matrix in which he characterised stakeholders by reference to their degree of power and level of interest.

Place the correct category against each of the classes of stakeholders.

E3 Question 24

Options:

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Questions 25

Porter suggests that competitive advantage arises from the implementation of a 'generic strategy'. Which THREE of the following are NOT generic strategies?

Options:

A.

Cost leadership

B.

Focus

C.

Differentiation

D.

Diversification

E.

Market development

F.

Market penetration

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Questions 26

Which of the following did Johnson, Scholes and Whittington identify as success criteria for the evaluation of strategic options?

 

Select ALL that apply.

Options:

A.

Suitability

B.

Affordability

C.

Feasibility

D.

Acceptability

E.

Durability

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Questions 27

BB Laundry Company is a community-led franchise initiative, enabling its customers to make use of state-of-the-art washing machines for its customers' domestic laundry needs. Services include self-serve or fully serviced washing and ironing services, provided by on-site volunteer staff.

Its laundry sites are powered with solar or wind power and its washing machines use water-conserving technology Non-toxic soaps and detergents are available, as well as bio-degradable clothes hangers, mend and repair services, combined with community cafes.

Which of the following would be beneficial to BB Laundry Company for external reporting of its key performance outcomes?

Options:

A.

Triple Bottom Line (TBL)

B.

Economic Value Added (EVA)

C.

Shareholder Value Analysis (SVA)

D.

Process Benchmarking Analysis (PBA)

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Questions 28

A leading retail chain is undertaking environmental scanning as it is concerned that it is becoming uncompetitive and profits have started to fall. The Board of Directors is concerned that it will need to have a viable strategy to present to its shareholders at the next annual general meeting, in order to prevent shareholders' protests.

The company has been reluctant in the past to offer an Internet shopping service. It now believes, however, that by offering this service and introducing customer relationship marketing (CRM), this will produce a strategy that will help it to improve its competitiveness.

Which of the following statements apply to CRM? (Choose all that apply.)

Options:

A.

The company must be prepared to take customers' needs into account and be able to meet these needs.

B.

In mature markets, existing customers provide the most likely source of future earnings.

C.

CRM is about marketing to customers to obtain their loyalty, so customer research is not needed.

D.

CRM utilizes marketing resources to retain, rather than simply attract new customers.

E.

The CRM process needs to include increasing the range of products that will be offered to customers.

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Questions 29

JKL is a bank with a large number of personal customers. 

 

A member of staff has reported their loss of a portable electronic storage device to his line manager.

 

The portable electronic storage device contains customer account details, including secure information such as personal login details to access personal accounts. JKL has a clear policy that forbids staff from downloading customer data on to portable electronic storage devices. 

 

It would be difficult for a member of the public to access the information on the device.

 

Which of the following would you advise JKL to do?

Options:

A.

Notify all customers of the loss and advise them to monitor their accounts for unusual transactions.

B.

Wait for customers to query unusual transactions and refund any money they have lost.

C.

Let the staff member explain why they downloaded data before deciding on their dismissal.

D.

Retain the staff member and monitor them secretly to establish whether they are engaged in a fraud.

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Questions 30

S is a hybrid car manufacturer. S relies on strong social media presence and online marketing campaigns to drive customers to its website. S prioritises measuring and improving active usage metrics.

Which of the following metrics does S prioritise?

Select ALL that apply.

Options:

A.

Abandon rates

B.

The customer feedback score

C.

The number of customer photographs uploaded

D.

Number of repeat webpage users

E.

Number of registered users

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Questions 31

LMN is a fast food manufacturer that makes 'Ready-meals'.

Place the appropriate stage of the Value Chain against each of the activities below:

E3 Question 31

Options:

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Questions 32

Select the label which best defines the periods of decline outlined in the situations presented below.

E3 Question 32

Options:

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Questions 33

MMM operates leisure parks in Country S. a mature economy in Europe. These are parks that are popular with people between the ages of 8 and 25 years who visit them to ride on the high speed roller-coasters and to visit other attractions at the parks. Nearly 60% of visitor expenditure is to buy meals and drinks at the park MMM estimates that 20% of its visitors travel to its parks from outside Country S.

Which THREE of the following environmental changes will have the greatest impact on MMM in the next five years?

Options:

A.

The growing strength of the emerging economies in Africa, Asia and South America.

B.

The average age of the population in Country S is increasing because of a fall in the birth rate.

C.

An increase in the statutory minimum wage in Country S.

D.

Introduction of government restrictions on the number of students and tounsts permitted to enter Country S.

E.

The opening of a rival leisure park in Country S with more modern rides and attractions.

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Questions 34

Ansoff has provided a product/market growth matrix which denotes possible strategic directions that an organization can follow.

Which of the following statements correctly describe the strategic options generated by the matrix? (Choose all that apply.)

Options:

A.

Diversification using new products in new markets.

B.

Product development using new products in new markets.

C.

Market development using existing products in new markets.

D.

Market penetration using existing products within existing markets.

E.

Market penetration using existing products in new markets.

F.

Market penetration using new products within existing markets.

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Questions 35

Company AA has decided that it needs to improve its strategic decision-making process and is considering implementing Scenario Planning.

The Management Accountant has been requested to investigate this further and also to consider how the company can use scenarios to formulate a competitive strategy.

 

Which of the following statements are CORRECT?

 

Select ALL that apply.

Options:

A.

A company taking a flexible scenario approach plays a 'wait and see' game. It is a safe strategy but sacrifices first mover advantages.

B.

When undertaking Scenario Planning the company will need to identify the key areas of certainty and their drivers.

C.

Scenario Planning forces management to look externally at the wider business environment rather than focusing internally.

D.

A company which designs a strategy based on the scenario most attractive to the firm is using a 'hedge' approach.

E.

Scenario Planning helps a company to identify and cope with the key uncertainties to which it will be exposed.

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Questions 36

As a CIMA qualified management accountant working within a manufacturing company, you are subject to both CIMA's Code of Ethics and your company's Code of Business Conduct.

Which TWO of the following statements are TRUE? (Choose two.)

Options:

A.

As a CIMA qualified Management Accountant you must follow CIMA's Code of Ethics.

B.

Where there is a difference between CIMA's Code of Ethics and the company's Code of Business Conduct, the company's Code of Business Conduct takes priority.

C.

Both CIMA's Code of Ethics and the company's Code of Business Conduct must be based on a set of basic principles.

D.

Both CIMA's Code of Ethics and the company's Code of Business Conduct include References to Confidentiality. Disclosure on public interest grounds is therefore prohibited.

E.

A company's Code of Business Conduct can be rules based.

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Questions 37

BBB is a global online recruitment agency It has over 20 million clients registered worldwide and estimates that it holds up to 80 terabytes of data about its clients. BBB gathers data about its clients from a wide variety of sources, such as client registration data input directly to the website, client browser and search histories and social media activity, all of which are used to build up a view of its clients.

Client data changes on a frequent basis and must be updated continually. New clients join the site regularly and the employment needs of clients often change. BBB utilises Big Data Analytics to evaluate its client data.

Which of the following features of Big Data are evident in BBB?

Select ALL that apply

Options:

A.

Variety

B.

Volume

C.

Velocity

D.

Veracity

E.

Visibility

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Questions 38

Strategy is usually described as having three different levels: namely corporate strategy, business strategy and functional strategy. Which of the following are corporate strategies? Select ALL that apply.

Options:

A.

A company has decided to invest to increase its levels of service to its key customers.

B.

A company has decided to liquidate its assets and go out of business.

C.

A company has decided to diversify into a new industry

D.

A company has decided to implement pay equality for all its employees

E.

A company has decided to implement a price cut to increase its market share.

F.

A company has decided to implement a cloud based disaster-recovery strategy.

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Questions 39

You have been asked to advise a junior member of your team what qualities they should look for when identifying a coach or mentor to work with.

Place the qualities associated with effective coaching and mentoring next to the relevant statements below.

E3 Question 39

Options:

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Questions 40

Company TTT produces a range of products, including products T1 and T5.

Product T1: Profitability has declined in recent years, although small profits continue to be made as the market contracts due to changing customer pReferences. Overall market share is low and continues to reduce. However, in addition to external sales T1 is also used as a component of product T5.

Product T5: A market leader within a low growth market, sources components both externally and from TTT's other subsidiaries. T5 benefits from significant economies of scale and TTT has recently considered modernizing its T5 production line but following a cost benefit analysis, decided not to proceed.

Which of the following is an appropriate strategy for TTT to adopt?

Options:

A.

Divest both product T1 and product T5.

B.

Harvest product T1 and Divest product T5.

C.

Harvest both product T1 and product T5.

D.

Divest product T1 and Harvest product T5.

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Questions 41

Which of the following would be a suitable performance measure of Internal Business Processes within Kaplan and Norton's 'Balanced Scorecard' model?

Options:

A.

Reduction in manufacturing cycle times.

B.

New products developed.

C.

Increase in market share.

D.

Higher P/E ratio.

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Questions 42

PQR is a charity which has an excellent reputation within its home country. PQR employs over 300 highly experienced staff and has 200 skilled volunteers. PQR's funding mainly comes from donations from the public but its public profile is low compared to larger, more publicized charities.

Due to a recent recession, public donations to PQR have fallen in the last five years, but demand for its services continues to grow.

The government of the country in which PQR operates is encouraging greater collaboration between charities and there have been several recent successful mergers within the charity sector. PQR has recently been approached by a high profile and well funded charity, DDD, with a merger proposal. DDD offers complementary services to those offered by PQR.

Which TWO of the following factors would most likely be considered as an ’opportunity’ for PQR? (Choose two.)

Options:

A.

Highly experienced staff

B.

Donations from the public

C.

Growing demand for its services

D.

The excellent reputation of DDD

E.

Merging with DDD

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Exam Code: E3
Exam Name: E3 Strategic Management
Last Update: Dec 9, 2024
Questions: 280

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