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

1. DRAG DROP

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

2. 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.

3. Mayo defined knowledge management as the management of the information, knowledge

and experience available to anOrganization .

Which THREE of the following are steps in the development and implementation of a knowledge management strategy?

4. Company GG is considering its future strategy on delivering a long-term competitive advantage. The Finance Director has recommended that the Board includes in the strategy a separate section on sustainability.

Which of the following is NOT a correct sustainability statement?

5. An IT project is currently being undertaken by VVV, a large university. The project is to design and install a secure information system network for all academic staff and administrative staff in the university. The Executive Board of VVV has insisted that the key objective of the project team is to track and monitor how the information system is being used by the academic staff and the administrative staff once it is implemented.

Which of the following would be an appropriate performance measure for the key objective set by VVV's Executive Board?

6. 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.

7. JJJ presently makes motorcycles for use by the armed forces in its home country. Defence spending cuts have forced JJJ to seek a new business direction. JJJ has decided to make trucks for sale to private businesses in its home country.

Use the Ansoff product/market matrix to identify the new strategic direction of JJJ.

8. ZZZ is a retailing Organizationthat 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.

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

10. BBB is a global manufacturer of organic fertilizers, used by farmers all over the world to improve resistance to disease and to increase crop yield. BBB uses data from past crop yield results, international weather prediction data and predictive models relating to population growth and movement statistics to identify and predict the fertilizers it will need to produce for its customers many years in advance.

Which of the following best describes the activities outlined above?

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

12. 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?

13. D is a Project Manager. D has just left a meeting with the Executive Team of hisOrganization. D is delighted that the Executive Team has given support to D's proposal to implement a knowledge management system in theOrganization.

What should be the next activity that D undertakes in this project?

14. 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 of the following statements are TRUE?

Select ALL that apply.

15. 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.

16. GGG is a manufacturer of four different components produced in four separate facilities. The Production Director has sufficient funds to modernise one of the facilities. GGG's decision rule in these circumstances is that investment is permissible in either a 'Cash Cow' or a 'Star' but not a 'Dog' or a 'Problem Child?' .

Which facility should be modernised?

17. FFF is considering developing a new website that will allow it to advertise and sell its high quality jewellery products online. The Board of FFF has identified that the cost of developing and managing a website would be relatively low. It is predicted that FFF will sell only a small percentage of its products through the website, as most customers like the personal experience of shopping in store.

However, research undertaken by the Marketing Director indicates that the website could be used very successfully by FFF for online marketing and customer communication. Therefore, theMarketing Director has suggested that FFF should develop an IT/ IS strategy to ensure a strategic focus for its website development. However, most of FFF's Board members, who are the main shareholders of the business, believe that developing an IT/IS strategy is unnecessary in order to develop and manage its website.

Which of the following arguments could be made by the Marketing Director to the Board of FFF to persuade it that an IT/ IS strategy would be appropriate in relation to the current website development?

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

Which of the following would NOT result from data mining?

19. 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?

20. PPP uses the Boston Consulting Group Matrix (BCG Matrix) to prioritise products for investment and divestment. PPP invests or divests according to the quadrant of the BCG Matrix that the product occupies.

Which TWO of the following quadrants might receive only as much investment as required to maintain PPP's relative market share?

21. 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.

22. DRAG DROP

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

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

24. 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?

25. 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.

26. Which of the following distinguishes a learning curve effect from a learningOrganization?

27. 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?

28. The future can be viewed as consisting of a large number of alternatives. Forecasting techniques have been designed to assist decision-making and planning.

Which TWO of the following statements are correct regarding the use of trend analysis as a forecasting tool?

29. EFG is a private hospital. It specialises in state-of-the-art laser surgery, an area which has developed rapidly in the last 10 years. Most of the staff of EFG are used to change, as developments in technology, new surgical techniques and customer demands have changedrapidly during this time. However, in the last three years the economic recession has had a significant impact upon EFG, with the numbers of private customers reducing and its profits falling sharply.

The Board of Directors has recently announced that it is to restructure theOrganizationand rationalise some of the services it offers. A small number of staff will be made redundant and those remaining will have to take on extra responsibilities with no extra pay. Also, the current generous overtime payments are to be drastically cut. Many staff have expressed concern at the impact that these changes will have on them.

The Board of Directors has clearly communicated the economic reasons for change to the staff through several meetings and are operating an open door policy, whereby staff can discuss the changes with their line managers at any time.

Which of the following, according to Kotter and Schlesinger, is the MOST likely reason for resistance among EFG's staff?

30. 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?

31. You are a Management Accountant working for a logistics firm that wants to build collaborative relationships with each of its key clients.

Which of the following changes to the management accounting function would you recommend to help the development of collaborative partnerships with a client?

Select ALL that apply.

32. Rosabeth Kanter suggested thatOrganizations which managed change successfully ('change adept'Organizations) share three key attributes.

Which THREE of the following are the key attributes of change adeptOrganizations, suggested by Kanter?

33. A large sporting event is due to take place in Country P next year and a project team has been set up to market the event. The project team recognises that a focus upon effective relationships with a range of key customer markets is critical to the success of the event. These key relationships need to be developed with the spectators, the broadcasting companies televising the event, the agents who are selling the tickets for the event and the key human resource providers such as the security companies involved in ensuring the overall security of the event.

Which of the following would be the correct classification of the broadcasting companies televising the sporting event, using Payne's 'six markets model' classifications?

34. PQR is a software design company. The Board of PQR has always openly encouraged partnerships with a wide range of designers and otherOrganizations in its industry, to continually develop and enhance the services it offers and to utilise the expertise and knowledge of a range of individuals andOrganizations. PQR's staff have also been highly creative and innovative in the design services they provide. PQR regularly analyses and keeps up to date with changes in the environment in which it operates. PQR 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 adeptOrganization, as defined by Kanter, has PQR demonstrated?

35. The Financial Director (FD) of your company has heard it said that 80% of profits come from 20% of customers. The FD has accused the sales team of wasting time on serving customers who are not valuable to the business.

The FD has instructed you to take a random sample of 100 customers and to calculate the total contribution the company earned from each customer in the past year. The FD intends to instruct the sales team to stop selling to the bottom 25% of these customers in order to improve profitability.

Which THREE of the following factors should the FD consider when he interprets your results?

36. 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.

37. DEF is a medium sized business which manufactures children's clothing. In the last 5 years demand has steadily increased and DEF is struggling to meet this demand within its current manufacturing capacity. DEF's current manufacturing machinery was installed over 10 years ago and now requires updating, if DEF is to survive in the marketplace.

DEF has established that the latest manufacturing technology would cost $2 million. This would be funded by the shareholders. It would payback within 2 years and would allow DEF to double output from its current level within this 2 year period. It will also improve product consistency and quality. However, it will result in the loss of 20% of DEF's manufacturing staff, most of whom are low paid and low skilled.

DEF is currently reviewing this proposed investment strategy, in terms of whether it meets the criteria of Suitability, Acceptability and Feasibility.

Which of the following correctly identifies the criteria which are met, in regard to DEF's proposed investment strategy?

38. DRAG DROP

MNO has decided to widen the scope of its performance measurement by constructing and using a Balanced Scorecard. MNO has established a range of Key Performance Indicators (KPI's) for use within its Balanced Scorecard.

Place each of the Balanced Scorecard perspectives against the most relevant KPI.

39. 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?

40. Which of the following of Porter's Five Forces would affect the power of suppliers?

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

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

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

43. QQQ is Country M's largest supermarket with 40% of the market share. In addition it has opened several stores around the world in the last 10 years. One of the reasons for QQQ's success is its loyalty card. The loyalty card is used to gather information about the spending patterns of its customers. Around two billion pieces of information each week are captured and stored in an enormous data warehouse that can be accessed by QQQ and other selected large retail partners.

The information can be used to assess the success of new product launches as well as which demographics of customer are making the purchases. The system also allows QQQ to tailor its special offers to particular segments of the market and to predict the buying behaviour of its customers, which assists QQQ in procurement planning.

Which of the following best describes the activities outlined above for QQQ?

44. CORRECT TEXT

DnD2_0333-R2-C. UU is a company that makes a number of different products. Each product has its own financial, marketing and risk characteristics. The combination of these products affects the attractiveness and profitability of UU.

For each product, UU's Board has decided to undertake a product life cycle exercise. This will enable it to examine each of its products and recognise the distinct product life cycle stage for each of the products sales history. Place the stage in the product life cycle next to the relevant statement.