CIMAPRA19-E03-1-ENG E3 Strategic Management Exam Questions

1. DDD has just issued a profit forecast in connection with a proposed take-over of a business. The take-over is strongly opposed by the target company. DDD's Management Accountant played a large part in helping DDD's Finance Director prepare the profit forecast. However, the Management Accountant believes that the profit forecast is overly optimistic and is based on some false assumptions. As a result the Management Accountant thinks the profit forecast is misleading. Select THREE of the actions below which are consistent with CIMA's Code of Ethics.

2. 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?

3. LLL is a travel company which has experienced rapid organic growth. It has three divisions and each division is led by a Divisional Director. Each Divisional Director is responsible for their own divisions' investment in Information Technology (IT). However, as LLL has grown, so has its information requirements.

Recently, LLL appointed an IT Manager. She discovered that within LLL's divisions, there are very different standards for IT, resulting in different hardware and software used in the three divisions. Also, the divisions do not use common software packages which causes difficulties in transferring information within LLL. LLL does not have a central IT department.

Which of the following activities would be the primary focus of an Information Systems (IS) Strategy for LLL?

4. 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?

5. Company LL is a well established, reputable company which specialises in providing insurance call centre services to the insurance industry. It has recently won a large contract to provide its services to a multi-national insurer. LL's staff are highly trained in insurance matters and many have worked for LL for many years.

LL undertakes long-term resource planning activities and has identified that during the winter months, when there will be more customers ringing up to make insurance claims, it will potentially need to employ more staff. The Board has decided that rather than recruit its own staff, it will use an employment agency to supply manpower resources as required. The people supplied will be employed on a temporary basis by LL and they will work alongside the other call centre staff. However, they will work at a lower pay rate and will only be paid for the actual hours they work.

This change will lead to a shift in the working environment, the routine and the composition of the group.

Which THREE statements apply in respect of this proposed change?

6. DRAG DROP

DDD is a company which publishes paper-based books. In the last 10 years DDD has seen a steady decline in its sales. Last month, one of its major customers, a large chain of high street bookshops announced that it would be closing as a result in declining sales in the paper-based book market. The Board of DDD has therefore announced that in order to survive, it must re-focus the business upon the developement of electronic books, which will require a significant investment in new technology and staff training. However, some staff will be made redundant as part of this process. The Board of DDD has stated that it will reward staff who actively embrace the change process.

Which of the activities below would occur within the 'Unfreeze', 'Change' or 'Refreeze' stage of Lewin's three-stage model?

7. Which THREE statements about scenario planning are correct?

8. LLL is considering entering Country B to sell its zero emissions car.

LLL has invested heavily in fuel cell technology for its car. It does not rely on any polluting fuels for its energy. This means that LLL's car is the only true zero emissions car.

Research conducted in Country B for LLL has revealed the following:

• Country B's Government is concerned that all forms of pollution have risen to dangerous levels.

• Despite being worried about pollution the Government of Country B has not yet adopted taxation policies to encourage the use of low pollution cars.

• Drivers choosing a car continue to rank the speed and appearance of a car very much high er than its impact on environmental pollution.

• About 2% of motorists own an electric or hybrid powered car.

• A high rate of sales tax levied on the price of new cars in Country B encourages motorists to continue to drive older, more polluting, cars.

LLL recognises that it needs to plan its strategy for Country B over the long-term.

Which THREE of the following strategies would you advise LLL to use to build its long-term sales in Country B?

9. You are a Management Accountant working for anOrganizationthat includes commitments to 'sustainability' in its mission statement.

Which THREE of the following are contributions that a Management Accountant can make to the achievement of this part of the Organization's mission statement?

10. As a qualified Management Accountant you have been asked by a non-financial manager to explain the CEO's recent comments, featured in the CEO's regular update to investors and analysts.

The CEO's update suggested the company, an established property development business, was about to pursue an exciting strategy. The strategy is to focus on conglomerate diversification, to be achieved through a number of pre-identified acquisitions, with the aim of significantly increasing shareholder value.

Which of the following statements is consistent with the concept of conglomerate diversification?

11. DRAG DROP

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.

12. RRR is a state-funded hospital serving a major city. It is under political pressure to reduce the waiting times of patients requiring surgical operations who need to stay at the hospital for several nights. The doctors blame a lack of bed spaces and are calling for more investment in extra beds.

You have been conducting some research into the problem and have discovered the following problems affecting the utilisation of the existing beds at RRR:

• many patients stay extra nights due to lack of communication with the health professionals needed to monitor the patients at home

• beds are left empty each day when patients miss their admission date but there are no proc esses to inform other patients to offer them the space

• patients are admitted on days when there are no spaces available on the special equipmen t needed to treat their particular condition

Which THREE linkages between Primary Activities in the Value Chain of RRR need to be improved to provide extra bed spaces at RRR?

13. Which TWO of the following statements are NOT characteristics of a robust 'coaching climate'?

14. T is a management consultant. He was recently contracted by company XYZ to act as an external Change Agent in aprogramof change being undertaken. T's first task was to assist XYZ in clearly defining the outcomes of the changeprogramand 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 changeprogram.

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 changeprogram.

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

15. Which of the following statements would encourage anOrganizationto use Scenario Planning?

Select ALL that apply.

16. 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.

17. HHH is about to undergo a period of significant change. HHH intends to draw upon the model suggested by Beer and Nohria, concerning 'Theory E' and 'Theory O'. In which circumstances should HHH use 'Theory O' strategies? Select ALL that apply.

18. AAA manufactures and sells a range of travel suitcases. One model, the 'Executive' has seen sales growth of around 3% for the last two years, following strong growth since its introduction eight years ago. This slow down in the 'Executive' sales growth is largely due to AAA's competitors offering products in direct competition with the 'Executive'. AAA has therefore had to reduce its price to match those of its major competitors. AAA has also recently upgraded the features of the 'Executive' model to include a variety of different colours and materials. It has also launched a marketing campaign to promote the benefits of the 'Executive' model against its competitors products.

Which stage of the product life cycle has the 'Executive' model of suitcases reached?

19. TTT is a partnership that designs a specialist type of construction project for clients. It does not build the construction projects itself. TTT has eight partners who are skilled architects. Each partner works independently on their own projects. The partners rarely meet except to agree how to share out TTT's very significant profits.

The partners are disappointed that TTT is not growing as fast as it has in the past. Each partner is fully employed on their own projects and none has the time to recruit new architects to TTT. They are frustrated at the lack of leadership in TTT, although none of the partners are willing to take on a more senior role.

Which THREE of the following does TTT need to address?

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

Three years ago it introduced multidimensional performance measures into its management control systems. These measure capacity utilisation, financial performance, competitiveness, innovation, and the flexibility of its centres to cope with changing demands.

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

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

21. Which THREE of the following statements are correct in relation to the use of the Performance Pyramid?

22. 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 accreditedprograms 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 accreditedprograms 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

accreditedprograms is currently higher than BCD's

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

23. DRAG DROP

Select the ethical principle which is most likely to be challenged in each of the following situations.

24. MMM is a multi-national company that manufactures and sells consumer durables. MMM has recently experienced severe trading losses and its Marketing Director has decided to revise the Marketing Strategy paying due regard to MMM's key external drivers.

Which THREE of the following are key external drivers for MMM?

25. 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?

26. CIMA has described the two roles of enterprise governance as 'preventing failure' and 'ensuring success'. CIMA sees 'preventing failure' as being related to having proper risk management and corporate governance procedures in place. CIMA sees 'ensuring success' as being concerned with the practise of strategic management.

Which THREE of the following responsibilities of senior management are essential to 'ensuring success' for theOrganization?

27. Lynch developed the performance pyramid to define the links between objectives and performance measures .

Which THREE of the following statements apply to the performance pyramid?

28. AB is a global car manufacturer. Management has agreed to spend $20 million on researching a new type of engine that uses liquid hydrogen to power the car. It believes it is important for AB to take a first step in developing this radical and uncertain new technology.

The $20 million will finance the research only and theprogramwill last two years. Providing the research is successful, after two years it would cost a further $40 million to develop a car to sell. This development would take a further three years. Management is concerned that the international car market may not be willing to buy hydrogen powered cars for at least six years from now.

Which of the following options would NOT be available to AB after two years?

29. Which of the following did Johnson, Scholes and Whittington identify as success criteria for the evaluation of strategic options? Select ALL that apply.

30. In Johnson, Scholes and Whittington's model of rational strategy which of the following stages appear? Select ALL that apply.

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

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

33. Organizations have a variety of stakeholders, each with differing interests and requirements. This can lead to stakeholder conflict. This can be further complicated when individuals are members of more than one stakeholder group and when members of one group do not share the same principal interest.

Company FF has decided that it needs to undertake a stakeholder analysis in order to manage its stakeholders more effectively.

Which of the following statements are valid when undertaking stakeholder analysis? Select ALL that apply.

34. BBB operates a national mobile phone (cell phone) network in one country. It is considering investing in upgrading its network to 4th Generation (4G) by providing an improved bandwidth that will enable its customers faster access to the Internet.

The investment will cost $29 million which BBB's institutional investors have agreed to provide by subscribing to a rights issue. This is because management has informed institutional investors that a rival is already offering 4G and that this is taking customers away from BBB because BBB's network is now regarded as too slow. BBB's remaining customers have shown a willingness to pay extra for 4G and overall the investment will have a positive net present value.

Which of the following statements are correct? Select ALL that apply.

35. The concept of Triple Bottom Line (TBL) reporting expands traditional accountancy reporting systems to consider social and environmental performance, rather than simply financial performance.

Which THREE of the following does the TBL concept suggest should be measured in order to encourage greater business social responsibility?

36. An insurer, JJJ, uses its Internet capabilities to promote and sell car and home insurance products. Although JJJ is supported by an 'in-house' call centre located in its home country, it has decided to outsource this activity to an overseas call centre.

There are a number of benefits to the company by undertaking this strategy, including that it can charge more competitive premiums to its customers and also increase its profits. However this change will mean that 75 call centre staff in the home country will be made redundant.

You have been appointed as the Change Leader and have been asked to prepare a report that includes details on how this change can be communicated.

Which THREE of the following statements are valid regarding JJJ's proposed changes and the related staff communications?

37. Coaching and Mentoring essentially involves a conversation where learning takes place through asking the right questions rather than providing answers. Consequently, Coaching and Mentoring can lead to both personal and professional transformation.

There have been many attempts to distinguish between Coaching and Mentoring, but it is widely acknowledged that the same skills and models are often used in both.

You have been asked to prepare a short briefing note on the Coaching and Mentoring of the Executive Management Team within your company .

Which of the following statements highlight the similarities between Coaching and Mentoring? Select ALL that apply.

38. 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?

39. Which of the following is NOT one of the main principles contained within the UK Corporate Governance Code?

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

41. BBB is a manufacturer of convenience meals .

Which of the following could be Weaknesses for BBB? Select ALL that apply.

42. 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.

43. Which of the following correctly defines Information Systems (IS) strategy?

44. DRAG DROP

Company XX and Company YY are the only two providers of electricity to Country M. The demand for electricity is price inelastic which means that buyers regard it as essential and therefore demand for electricity does not change significantly if the average price of electricty changes. However customers will switch between suppliers within a year to get cheaper electricity. Using Game Theory place the long-run revenue impact on each firm of each of the following pricing decisions.

45. 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?

46. 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.

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

48. 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.

49. CORRECT TEXT

DnD4_0071-R2-A.YYY wishes its managers to implement a changeprogram. YYY proposes to draw upon two change models associated with Kurt Lewin to assist in this process.

Place against each of the statements below the appropriate Lewin change model or whether neither model applies.

50. FFF manufactures and sells three consumer products. The Marketing Manager has enough funds to commission an advertising campaign for only ONE of the three products.

The Marketing Manager's criterion for allocating funds for an advertising campaign is that the product should be a "Star" according to the BCG matrix.





Which product should receive the investment?

51. VWX manufactures and sells a wide range of products. All these products utilise lenses and digital imaging technologies. VWX is considering how to manage its product portfolio.

Management is concerned about two product ranges in particular: cameras and home projectors.

VWX's cameras are Single Lens Reflex (SLR) cameras featuring interchangeable lenses and provide detailed, high quality images of objects both at very close range and at considerable distances. VWX has the largest share of the camera market but the market sales are falling as people increasingly use their mobile phone handsets to take and share photographs.

VWX has a small share of the home projector market. As a consequence the range is loss making. The home projectors are used to show photographs or films on large wall-sized formats. There is a growing trend for customers to buy home projectors to connect

to mobile phones, tablets and games consoles to project the content into a larger image and in order to share it.

Which THREE of the following product management strategies should VWX adopt?

52. TTT is a software design company which has grown successfully over the last 8 years. It has been highly innovative and often collaborates with a number of external partners to produce high quality, innovative software for a wide range of customers.

TTT's owner, K, has been a driving force behind its success. He spends a great deal of time analysing what is happening in the marketplace and trying to predict what customers need from TTT, through a network of industry contacts. He has a strong vision for TTT and communicates this, with conviction, to his staff in regular face to face meetings. He recognises and rewards his staff when new developments are undertaken and completed successfully and believes that if staff feel appreciated, then they will be more motivated to succeed.

Which THREE of the following skills for a leader in a change adeptOrganizationdoes K demonstrate?

53. 'Big data' refers to datasets whose size is beyond the ability of typical database software tools to capture, store, manage and analyse.

Which of the following statements is NOT a valid statement regarding 'big data'?

54. Company RR operates in the finance sector. It is experiencing increasing delays in approving loan applications, due to customers not promptly returning their signed copy of the application forms back to RR.

RR is now wanting to introduce e-signatures which allow customers to sign the document on their computer and return it back to RR through the Internet. This change will help to simplify the process and ensure that customers obtain their loans quicker.

To achieve this change, RR has established a project and has appointed you as the Project Leader to lead the change.

Select the THREE valid statements in respect of leading change.

55. 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?