E3 E3 Strategic Management Questions and Answers

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.)

Company MM is wanting to build an out of town shopping complex. This will be located near a busy road which is surrounded by housing estates. MM has yet to obtain planning permission. It recognizes that unless it takes action, the local residents will object to MM ' s plans. As the Publicity Manager you have been asked to take over responsibility for Stakeholder Management.

Which of the following Stakeholder Management statements is NOT correct?

McKinsey ' s ' 7-S ' model can provide companies with a useful insight into some of the issues experienced as part of a change initiative within a company.

Which THREE of the following are identified as SOFT elements within McKinsey ' s ' 7-S ' model?

HHH intends to introduce a Balanced Scorecard to assist with its strategic policy formation and achievement of strategic plans. Which TWO of the following stakeholders are addressed by a Balanced Scorecard perspective?

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

An organization must acquire suitable hardware and software in order to implement a knowledge management strategy so that knowledge can be stored and communicated.

Which of the following would be appropriate systems to use in a knowledge management strategy? (Choose all that apply.)

GQF is an exclusive fashion retailer. GQF has built its strong name and reputation upon its high price and exclusive image. It has recently attempted to increase sales by expanding into lower-pnced clothing sales in department stores. It has also allowed its name to appear on a number of licensed products such as perfume and watches. Many customers who would not normally purchase GQF products have shown a high level of interest in these lower-priced products and in the last twelve months, sales have increased dramatically GQF ' s shareholders have expressed their satisfaction with the results.

However, over the same period, sales of its high priced, exclusive branded goods have fallen as some of its traditional, loyal customers have become disillusioned by the lack of exclusivity of the GQF brand.

Which of the following criteria have been achieved by the strategy adopted by GQF?

Your management team is considering using Porter ' s Value Chain to assist it in developing a new competitive strategy for the business.

Which THREE of the following statements would inform your management team about Porter ' s Value Chain?

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? 

VW is a Non-Governmental Organisation (NGO) based in Country A, a mature economy. VWs mission is to provide food, agricultural tools and seeds, and low cost housing to the villagers in Country G: a deprived country that is suffenng from the effects of civil war.

VW cannot change its mission nor adopt any strategies that would be incompatible with that mission.

WV depends on funding from the Government of Country A, donations from private organisations, and donations from the general public However, these donations have fallen considerably in recent years due to the environmental factors listed below.

Which THREE of the environmental factors should VW develop strategies to address?

LMN is a medium sized Organization which has faced a number of challenges due to the recent economic recession. In the last 3 years, its profits have fallen each year and it has made 10% of its staff redundant during the same period. LMN has a hierarchical structure with formal lines of communication. All of the key business decisions are made by a small senior management team, as the senior managers believe that they have the most experience to make these decisions.

LMN has recently hired an external change agent to review its activities and to make recommendations on what it must do to ensure its survival. Having spent several weeks talking to staff and observing the activities and management processes of LMN, the external change agent has made the following recommendations:

1. Reduce the management levels within LMN, as this is limiting its ability to respond effectively to customer demands.

2. Allow some of its staff to take part in the decision making process, as much experience and expertise is being overlooked when making key business decisions.

Which TWO of the following elements of the Cultural Web will be most affected by the change agent ' s recommendations?

HHH is an international distribution company which operates a number of large distribution warehouses. HHH employs over 10,000 staff who operate the warehouses 24 hours per day and process over 500,000 packages and parcels each day. HHH operates in a highly competitive market and the senior management team recognize the importance of focusing upon its Critical Success Factors (CSF ' s). However, some senior managers are confused as to the difference between CSF ' s and Key Performance Indicators (KPI ' s).

Which of the following are Critical Success Factors for HHH? (Choose all that apply.)

BCD is an independent training provider in Country P. It provides training to a wide range of corporate customers in business related subjects. All of its tutors must possess a nationally accredited training qualification before they are allowed to teach. Also, all of its courses follow nationally accredited programs and are externally monitored. This is considered to be a critical aspect of its business reputation.

BCD  has one major competitor, JKL, within Country P. JKL offers similar courses to BCD but its tutors do not have to have an accredited training qualification. In addition its courses do not follow the national accredited programs and the content and style of courses varies significantly between JKL centres. 

There are a number of universities which offer nationally accredited courses within Country P. BCD does not consider these as competitors, as they typically attract students wishing to undertake degree courses. The average university pass rate for nationally accredited programs is currently higher than BCD ' s

Which of the following types of benchmarking would be most useful for BCD?

When FarmCot Foods was founded five years ago, it was a small shop set up by a family of dairy farmers in a disused farm shed, selling their own produce to the local community. The family had decided, at that point in time, to diversify their dairy farming activities into also selling their own milk, cheese and ice cream products. The aim was to increase their revenues, as dairy farming in their home country had been in decline for a number of years.

Since then, the shop has been very successful and has expanded rapidly over the last three years, due largely to a strong growth in tourism in its home country and a shift in consumer demand for locally sourced fresh farm products. FarmCot Foods is now located in a large purpose-built building on the site of the original farm shed and also operates a very popular café, a children ' s play area and sells a much wider range of products and gifts, which are all sourced from local suppliers.

Which of the following best describes FarmCot Foods approach to strategy development in the last five years?

Data mining is an important part of an Organization ' s knowledge discovery process.

Effective data mining provides insight and can help unlock previously hidden opportunities.

Which of the following are disadvantages of Data Mining?

Select ALL that apply.

CCC is a software design company. The Board of CCC has always openly encouraged partnerships with a wide range of designers and other organizations in its industry in order to continually develop and enhance the services it offers and to utilize the expertise and knowledge of a range of individuals and organizations. CCC ' s staff have also been highly creative and innovative in the design services they provide. CCC regularly analyses and keeps up to date with changes in the environment in which it operates. CCC operates a sophisticated website to promote its services and keep in touch with its service users.

Which TWO of the following attributes of a change adept organization, as defined by Kanter, has CCC demonstrated? (Choose two.)

GGG is currently undertaking a process of intuitive forecasting. A team of ten people has been selected from all levels of management and from a range of functional departments, to take part in the process. An initial single question of ' How do we improve future customer satisfaction levels for GGG? ' has been posed and all members of the team have been asked to present a suggestion. No one is allowed to criticise another person ' s ideas. This process should give GGG a forum for the expression and discussion of a wide range of ideas.

Which of the following intuitive forecasting techniques is GGG undertaking?

Information Systems (IS) strategy is correctly defined as:

LLL is an international oil and gas exploration company. It is considering investing S300 million in developing new oil fields in Country D. For this it will need to obtain a license from the government of Country D.

These new oil fields will bring much wealth to Country D because a large proportion of the revenue from the production of oil will be paid to the government as part of the licensing agreement.

However, oil production in Country D will have some undesirable social effects, such as the threat of pollution, congestion to the roads and pressure on local amenities such as housing, electricity and clean water.

Which of the following approaches to stakeholder management should LLL NOT undertake in order to enter Country D?

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?

Company W manufactures marshmallows for sale to supermarkets across Europe. W follows a logical and formal approach to strategic planning. Which of the following are valid stages of such a rational strategic planning model? Select ALL that apply.

Which of the following is NOT an external driver that leads management to adopt greater sustainability in the activities of its business?

Irvine and Martin presented the advantages of Foresight as the 5Cs. Which of the following are correct aspects of the 5Cs as defined by Irvine and Mart in? Select ALL that apply.

PPP is a state owned national railway operator. It has many divisions, each focusing on specific areas of the country.

PPP ' s mission statement is ' to provide a safe, punctual and reliable public transport service at lowest cost to its passengers and the government ' .

Which THREE of the following divisional performance measures should PPP adopt?

A company runs a distribution warehouse. Its information systems constantly monitors inventory levels, with automatic re-order processing occuring with suppliers when inventory items reach a specified level. It operates a robotics system which automatically picks inventory from its location in the warehouse and delivers it to the pick-up area. The company also has a large database of customer information which it uses to analyse buying behavior and sales trends so that it can provide customers with relevant and targeted marketing information.

Which THREE of the following activities of the Value Chain have been affected by the use of IT/ IS?

Which TWO of the following benefits could be achieved through the use of Triple Bottom Line (TBL) Reporting?

You are the youngest member of the senior management team and have recently been invited to become a member of the company ' s Board.

You have been sent an outline agenda ahead of your Board induction meeting with the Company Secretary. The first item on the agenda is the role of the Board.

Which of the following statements is NOT the role of the Board?

RST is a company specializing in the production of wood-based products. RST has decided to introduce a fully integrated Information System across all divisions in order to improve knowledge sharing throughout the business and enhance customer relationship management.

RST is expecting resistance to the integrated Information System from it ' s staff who are key to the business and would be difficult to replace. Staff have a good understanding of why the new system and knowledge sharing is needed and how the system will work but many staff are not happy about the potential changes to their working conditions.

Which of the following change leadership styles, as outlined by Kotter and Schlesinger, would be most appropriate for RST to adopt?

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.

HH is an outdoor theatre which is based in the capital city of country N. Tickets for shows can be booked at the ticket office or online. HH has identified the following critical success factors (CSFs):

An excellent, online ticket booking system

Customer satisfaction

Which of the following would be suitable key performance indicators (KPIs) for HH? (Choose all that apply.)

MM is a business which sells entertainment products.  MM now wants to move to a position where it uses e-business as a fundamental part of its business strategy. 

Which of the following benefits would result from MM ' s use of e-business? Select ALL that apply. 

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.

P owns an internet-based business, called GWiz. based in Country G. GWiz sells gifts, cards and flowers for a variety of occasions including birthdays, weddings and many other special events. P sources her products from a variety of partner suppliers located throughout country G. Customers ' orders are delivered by third party couriers across the whole country. The GWiz website is hosted and managed by an IT specialist

P is a member of a local small business trade federation and has been asked to make a presentation to its members on her experience of running GWiz as a ' virtual organisation ' .

Which of the following statements could P correctly make on the benefits of virtual organisations?

Select ALL that apply.

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?

Mission statements set out the purpose of an Organization to a range of stakeholders who have an interest in what the Organization does. As an employee, you have been asked to assess the effectiveness of your Organization ' s mission statement.

Which of the following would NOT help the effectiveness of a mission statement?

H is a small 18-hole golf club owned by sisters F and R It offers a bar. a small shop that sells basic equipment and a professional golfer providing golf lessons to members for an additional fee.

Membership numbers have fallen, putting significant pressure on cash flow Last year the sisters had to each invest $20,000 to prevent the golf club from going out of business. The key priority for them in the short term is to increase H ' s membership numbers.

Which TWO of the following strategies would be feasible for H?

Place the correct label against each of the descriptors for the main principles of the UK Corporate Governance Code.

Company Y is a global business selling a selection of technological items including phones, laptops and other computer related items. In addition Y sells accessory items, music downloads, apps: digital books and video downloads including films and television series through a cooperative partnership with other companies, designed to create value for the customer.

Which of the following terms best describes what Y has created?

AAA has a new CEO who wants to introduce rational strategy into the organisation.

Which THREE of the following are aspects of the rational strategy model?

QR is a conglomerate with two divisions, A and B. Given the information below, select the most appropriate strategy for each division to implement.

Which of the following statements is NOT a role for Management Accountants involved in the strategy development process?

AB uses Johnson, Scholes and Whittington ' s criteria of ' Feasibility and Acceptability ' to evaluate potential strategies. AB has begun a project to re-engineer its best selling product.

Apply the appropriate criterion to each of the questions below:

SSS is a large department store. It operates a chain of stores throughout Country Z. It offers a wide range of products, from cosmetics through to home furnishings.

SSS ' s Value Chain is presented below. 

Which of the following generic strategies is being undertaken by SSS?

Which of the following would be correct considerations when evaluating the Feasibility of a strategy? (Choose all that apply.)

Company GGG wants to gain competitive advantage and has decided to use data mining.

Which of the following would NOT result from data mining?

Porter ' s Generic Strategies are often applied within an Organization ' s value chain, in order to organise the value-adding activities to support the chosen strategy.

Place the Generic Strategy which best defines the strategic approach being taken against each of the activities listed below.

HHH is a teaching Organization. HHH has begun to employ virtual reality to train the customers on its courses in how to perform complex manual tasks such as repairing machinery.

Which activity in Porter ' s Value Chain has been impacted by HHH ' s use of virtual reality?

A fresh-food packaging manufacturer has recently changed the design of its packaging in order to reduce the amount of non-recyclable material. Its immediate customer, a large fresh-food wholesaler, does not see the need for this re-design as it believes that it will adversely affect the storage of the fresh food. However, the final customer, a large supermaket chain, has expressed strong interest in the new packaging design, as the supermarket chain has strict Corporate Social Responsibility targets to achieve.

Which of the following statements most appropriately describes the situation outlined above, from the perspective of the fresh-food packaging manufacturer?

SDC is a medium sized IT systems development company. SDC employs highly qualified and experienced systems development experts. It invests heavily in staff training and development and as a result, staff are highly motivated and staff turnover is low. SDC has a strong culture of team work and innovation, which the senior managers believe is the basis of SDC ' s success. The senior managers, who are also the founders of SDC, are highly experienced and have a strong vision for the business.

Which THREE of the following factors would be the main focus of a resource audit for SDC? (Choose three.)

In 1989 Earl developed a framework to analyse the linkages between information systems, information technology and information management. Which of the following is NOT a characteristic of Information Systems strategy?

STU is a government funded university in Country V. The senior management team of STU uses the 3 E ' s approach (Economy. Efficiency and Effectiveness) to evaluate the performance of the university and to set performance measures.

Which of the following measures would be categorised as a measure of the ' Effectiveness ' of STU, based upon the 3 E ' s approach?

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?

PQR is evaluating the use of scenario planning to improve its organisational foresight.

Which THREE of the following are advantages of scenario planning?

The Management Accountant in company PP has been asked by the Finance Director to produce a paper on  " Game Theory " for the next Board meeting.

Which of the following is a valid statement?

Which THREE of the following are classified as business operating systems measures within the Performance Pyramid?

Kanter identified seven ' power skills ' that change agents need to overcome apathy or resistance to change. Which of the following are power skills?

Select ALL that apply.

A Porter states that competitive advantage can be gained by following one of three generic strategies.

Place the appropriate generic strategy against each of the statements below.

ZZZ recently hired a new Chief Executive, Q, to lead it through a period of major change. Q immediately set up a change management team which consisted of several senior managers and directors from across the Organization. Together, they formulated an overall goal for change and then spent several weeks presenting the need for change to all of the staff  through a series of staff meetings. At these meetings Q involved staff and built their ideas into the final change strategy.

Q also set a series of interim goals to encourage ongoing performance throughout the change process. When the Organization reached these goals, she widely publicised these achievements to help motivate staff. 

However, after six months, ZZZ had failed to reach most of the interim goals that had been set. Most of the members of the change management team had not maintained a significant interest in the change process and many of the staff felt that there had been a lack of communication and reward following the initial few weeks of the change process.

Kotter suggested that there were eight steps required to successfully lead change.

Which TWO of the following of these eight steps did Q fail to achieve?

NNN is a logistics firm that contracts with online retailers (clients) to deliver parcels containing customers '  purchases, to customers '  home addresses. NNN holds inventory of the most frequently ordered products at its warehouses.

According to industry research, most clients require the contractors to deliver the customers their purchases soon after they place their order. They are not concerned with the environmental impact of the logistics process. They require very competitive delivery prices from their contractors.

Customer research reveals that households dislike being asked to stay at home for an entire day because logistics firms are unwilling to commit themselves to a precise delivery time. This problem has led to a small number of cases of customers arriving at the warehouses of logistics firms demanding to take their purchases away with them. Most households do not consider the environmental policies or performance of the firms they buy from.

The logistics industry is very competitive and NNN wants to protect its existing contracts and to win more. It needs to focus its resources on the ' things that must go right ' in order for it to succeed.

Which THREE of the following are Critical Success Factors (CSFs) for NNN?

Company PP is a large UK retail company.

In the past it has focused primarily on using financial performance measures. However, PP then realised that this was leading to short-term decision-making on investment in easily valued assets and under investment in assets such as employee skills and customer satisfaction, where short-term returns are more difficult to measure.

It has therefore adopted the Balanced Scorecard approach. PP is now considering enhancing it ' s approach by using Kaplan and Norton ' s Strategic Mapping model, as this will enable it to establish its priorities and manage stakeholder expectations.

Which of the following statements would be regarded as improvements by using Strategic Mapping.

Select ALL that apply. 

EEE is an international airline.

Indicate which of the following activities are ' primary ' or ' support ' in accordance with Porter ' s Value Chain.

Porter suggests that competitive advantage arises from the implementation of a generic strategy which best fits the organisation ' s environment. Which of the following are generic strategies ' ? Select ALL that apply.

As a Group Management Accountant you have been asked to explain the different types of change currently taking place within a number of the Group ' s subsidiaries.

Select the appropriate type of change for each of the descriptions below:

A leading supermarket chain is undertaking environmental scanning as it is concerned that it is becoming uncompetitive and profits have started to fall. The Board is concerned that when the next Annual General Meeting is held, it will need to have a viable strategy to present to its shareholders, in order to prevent shareholders ' protests.

In the past the company has been reluctant  to offer an Internet shopping service. However, it now believes that by offering this service and also 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?

Select ALL that apply.

The Board of a supermarket chain has decided that to compete more effectively against its competitors, it needs to change its strategy and pursue a differentiation-focus strategy. The Board ' s aim is to pursue differentiation to attract customers who have a higher disposable income and want to buy luxury food and other goods.

Which statements are valid for this differentiation-focus strategy? 

Select ALL that apply.

BBB is a publisher. As a consequence of BBB using the Internet to outsource its typesetting and studio activities it has been able to move its few remaining staff into much smaller and less expensive office accommodation.

Which activity in Porter ' s Value Chain has benefitted from BBB ' s use of information systems?

XYZ operates a national chain of restaurants.

Which THREE of the following are external environmental drivers for XYZ?

The Boston Consulting Group developed a matrix to assist managers in identifying the cash flow requirements of different businesses.  The matrix suggests a number of appropriate strategies. Select ALL the strategies that apply to the Boston Consulting Group ' s matrix.

To lead change successfully, Kotter and Schlesinger recommends that an Organization should change its strategy according to the situation. Effective change leadership therefore involves determining the optimal speed of change.

Which of the following statements would justify proceeding slowly with a change initiative?

T is a management consultant. He was recently contracted by company XYZ to act as an external Change Agent in a program of change being undertaken. T ' s first task was to assist XYZ in clearly defining the outcomes of the change program and ensure that these were achievable. T also set up a number of change teams and led several workshops and team building exercises. Many of XYZ ' s staff were resistant to the change program. Therefore, T had to ensure that he created an appropriate vision for the change and was able to resolve any conflict which occurred during the change program.

Which THREE of the following are the key skills of a Change Agent demonstrated by T?

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?

Using Earl ' s ' Three levels of IT strategy ' framework, which one of the following activities would occur as part of an Information Systems (IS) strategy?

STU is a hospital that is wholly funded by its national government. In the last five years it has seen its funding cut by over 30% due to budgetary pressure on the government, caused by a global recession. As a result, the senior management team of STU has had to make some very difficult decisions about prioritizing how it spends the funds it receives from the government. Its main strategies have been to reduce the number of administration staff and nursing staff by 20%, in order to reduce its costs. It has also stopped providing a number of services to patients, including its counselling services and its physiotherapy unit.

Which of the following strategies has STU adopted to manage its reduced funding? (Choose all that apply.)

Select the quality associated with effective coaching and mentoring for each of the descriptions below:

CCC is a small business which manufactures and sells bicycles. Its most popular product is the standard road bike, brand named the ' Easy Rider ' . CCC offers customers a limited degree of choice in terms of product specification for the Easy Rider bicycle. CCC manufactures and sells 1,000 Easy Rider bicycles each year. The average retail price of an Easy Rider bicycle is $500.

As a result of the recent rise in popularity of cycling in its home country, last year CCC launched a new bicycle, brand named the  ' Pro Rider ' . This bicycle is aimed at the more serious cyclists who take part in competitions and road races. CCC offers Pro Rider customers a wide choice of specifications and accessories and uses the highest quality of materials in its manufacturing process. A Pro Rider bicycle retails for an average price of $6,000. In its first year, CCC sold 150 Pro Rider bicycles.

CCC ' s business is generated mainly from word of mouth recommendations, repeat business and from customer visits to its small chain of shops. It aims to increase its market share for both brands within the next 5 years. Competition is high, with a number of large national bicycle manufacturers in the market. 

Which TWO of the following are critical success factors (CSF ' s) for CCC?

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.

According to Johnson, Scholes and Whittington, Suitability is an important consideration when evaluating potential alternative investment strategies.

Which of the following is a Suitability consideration?

JJJ is about to undergo a period of rapid and far-reaching change. JJJ ' s Chief Executive has heard about work published by Beer and Nohria, ' Theory E ' and ' Theory O ' , which identified reasons for business change initiatives failing. Select THREE of the following circumstances where it would be appropriate to use a  ' Theory E ' approach. 

Which of the following structures would you recommend for the Board of Directors of a UK public company in order to fulfill its legal responsibilities?

In respect of mission statements, place the word " characteristic " or " purpose " against the relevant activity.

ABC is an online bank which has just reported substantial trading losses. It has received advice from a leading business consultancy that it should implement the following two strategies:

1. Take advantage of its reputation and brand image by entering a new industry.

2. Update all its networks to fifth generation (5G) as soon as possible. Which TWO of the following strategies has ABC been advised to implement?