Question 1

Which of the following categorizations would be correct, according to McFarlan's Strategic Grid, for a system which is critical to sustaining existing business but its future strategic importance is considered to be low?
A) Turnaround
B) Support
C) Strategic
D) Factory

Accepted Answer

A system that is critical to sustaining existing business but has low future strategic importance would be categorized as a Support system according to McFarlan's Strategic Grid.

Question 2

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.)
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.

Accepted Answer

D,E

Question 3

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?
A) Standards and Rewards
B) Standards, Dimensions and Rewards
C) Dimensions and Standards
D) Dimensions and Rewards

Accepted Answer

The problem lies in the "Dimensions" because the measures are too open to interpretation, and in the "Standards" because there is inconsistency in how performance is evaluated, leading to confusion and dissatisfaction among managers.

Question 4

Z is a medium-sized UK based accounting practice. Z operates a graduate training scheme. The trainees are given an induction and then placed on a three-year training programme designed to help develop professional skills and experience. The training programme has been in existence for many years. However, there is no clear consensus amongst the partners of Z about what the trainees should be able to do on completion of the programme and therefore what the training programme should emphasize. This lack of clarity is affecting the morale and commitment of the trainees and significant numbers are failing the programme or leaving to join a rival firm. Z's HR Department recognizes the need for committed and well motivated accountants to meet the increased expectations of clients and the competition from rival firms. The HR Department has identified changes to the training programme that can be implemented gradually through a series of initiatives. Which TWO of the following statements regarding the change required in Z are correct? (Choose two.)
A) Understanding which day-to-day behaviors to reinforce within the training programme, is about 'routines and rituals' according to the Cultural Web.
B) The change would be classified as a 'revolutionary change' according to Balogum and Hope Hailey.
C) The need to manage the competitive position is an example of an 'external direct trigger' for change.
D) The plans to combat competition would be considered as a 'structure' factor according to the McKinsey 7 S model.
E) The skills, abilities and competences of the organization's employee's are a 'hard' factor according to the McKinsey 7 S model.

Accepted Answer

The need to manage the competitive position is an example of an 'external direct trigger' for change. The skills, abilities and competences of the organization's employee's are a 'hard' factor according to the McKinsey 7 S model.

Question 5

RRR is a medium sized company, which has built family homes in Country В for twenty years. The Board of RRR wishes to expand company operations and start building homes in the neighboring country. The Board of RRR wishes to undertake a position audit to help in this decision. Which of the following strategic analysis tools would be used in a position audit for RRR?
A) Gap Analysis
B) PEST
C) SWOT
D) Five Forces

Accepted Answer

A SWOT analysis is used in a position audit to assess the internal strengths and weaknesses, as well as external opportunities and threats, of a company.

Question 6

You work as a Management Accountant for GHJ, a company that includes commitments to 'sustainability' in its mission statement. Which THREE of the following are contributions that you, as Management Accountant, could make towards the achievement of this part of the company's mission statement? (Choose three.)
A) Project evaluations that include the externalities as well as the cash costs.
B) Providing financial information with all non-recurring expenditures and incomes removed.
C) Ensuring the organization adopts the lowest cost technologies and suppliers.
D) Integrated reporting of the triple bottom line of Profits, People and Planet.
E) Measures of organization's use of non-renewable resources and environmental emissions.

Accepted Answer

These choices all contribute to the achievement of sustainability by considering environmental and social factors, as well as financial performance.

Question 7

Which THREE of the following issues relate to the Corporate Strategy of an organization? (Choose three.)
A) Entering new industries.
B) Avoiding competitive disadvantages.
C) Achieving advantage over competitors.
D) Meeting the needs of key customers.
E) Leaving existing industries.
F) Acquisitions, disposals and diversification.

Accepted Answer

The answer of Which THREE of the following issues relate...

Question 8

ZYX is a global hotel chain, employing over 10,000 staff worldwide. ZYX operates a Code of Conduct for all of its staff, which states "Our staff are the most important assets of our business operations. We expect the highest standards of ethical and professional conduct from all staff, who must display the principles of trust, respect, equality, integrity and fairness at all times." Which THREE of the following actions could ZYX take to positively influence its staff to work to the ethical and professional principles in its Code of Conduct? (Choose three.)
A) Disciplinary actions, such as fines, for staff who do not display high ethical and professional standards.
B) Publication on its website of ZYX's Code of Conduct and regular examples of staff displaying the highest standards of professional conduct.
C) Induction and on-going staff training on ZYX's Code of Conduct and ethical and professional principles.
D) Interview process for staff prior to employment, to assess their understanding of ethical and professional behavior.
E) Set performance targets in diversity and equality for its hotel senior managers.
F) Operate a system of reward incentives for staff who display high ethical and professional standards.

Accepted Answer

The answer of ZYX is a global hotel chain, employing...

Question 9

A is a private healthcare organization aiming to provide affordable and accessible high quality patient services. A is introducing Big Data, which has not yet been adopted by the competition. A's database will store a huge amount of information about its patients. Clear access to wide sources of accurate information will enable patients to make more informed choices. Patients will be able to compare not only the prices of drugs, treatments and physicians but also their relative effectiveness. Which of the following concerns should A have about its use of Big Data?
A) Lack of competitive advantage
B) Veracity of information
C) Variety of information
D) Privacy issues

Accepted Answer

The answer of A is a private healthcare organization aiming...

Question 10

Which of the following would be a suitable performance measure of Internal Business Processes within Kaplan and Norton's 'Balanced Scorecard' model?
A) Reduction in manufacturing cycle times.
B) New products developed.
C) Increase in market share.
D) Higher P/E ratio.

Accepted Answer

Reduction in manufacturing cycle times is a measure of internal business processes, as it measures the efficiency of the production process.

Question 11

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.)
A) Customer show ratings, scored out of ten.
B) Number of returning customers each year.
C) Profit from sales of snacks and drinks.
D) Employee turnover.
E) Percentage of ticket bookings aborted before completion.
F) Number of customer complaints.

Accepted Answer

The answer of HH is an outdoor theatre which is...

Question 12

RRR is an insurance company which maintains an extensive database of its customer transactions over the last 10 years. RRR is developing a new product and has carried out a SWOT analysis. Within which of the following aspects of the SWOT analysis would RRR include its customer database?
A) Opportunity
B) Threat
C) Weakness
D) Strength

Accepted Answer

The customer database is a valuable asset that provides insights into customer behavior and preferences, making it a strength for the company.

Question 13

Company CCC is an automotive component manufacturer. It manufactures three main products within its portfolio: Product 1: Relative market share of 0.1; Market growth rate of -2% Product 2: Relative market share of 4.0; Market growth rate of +3% Product 3: Relative market share of 0.3; Market growth rate of +15% Which TWO of the following statements are CORRECT? (Choose two.)
A) Product 2 is likely to be at the mature stage of its life cycle, is likely to benefit from significant economies of scale.
B) Product 3 is likely to be at the growth stage of its life cycle, at high risk of failure and further investment should be considered.
C) Product 1 is likely to be at the mature stage of its life cycle, operating in a contracting market and is fairly cash neutral.
D) Product 2 is likely to be at the growth stage of its life cycle, have weak profitability, poor cash generation and high capital requirements.
E) Product 1 is    likely to be at the mature stage of its life cycle, have strong profitability and further investment should be considered.

Accepted Answer

The answer of Company CCC is an automotive component manufacturer....

Question 14

You have been given responsibility, as a newly qualified management accountant, for delivering an ambitious project to centralize and computerize the accounts function within a medium-sized, geographically dispersed business. The timetable also requires the project to be delivered within a very short timescale with limited resources. You have built a team to deal with these proposed changes. With regard to effective teams and change, which THREE of the following statements are correct ? (Choose three.)
A) Teams that cross departmental boundaries can destroy shared values.
B) Teams play minor roles in institutional change.
C) Individuals must become more than they were when working alone and must develop new commitments and behaviors.
D) Teams should continue after their purpose has been served.
E) Teams that cross departmental boundaries can develop new performance criteria.
F) Teams enhance learning and address change directly through creating recommendations and new ideas.

Accepted Answer

Teams are essential in change management as they encourage individuals to grow and adapt, develop new performance criteria by crossing departmental boundaries, and enhance learning by generating new ideas and recommendations.

Question 15

M is a car manufacturer in Country C. Every day, at 09.00, members of M's staff practice meditation and Tai Chi for 30 minutes, before their normal workday commences. M's staff are paid during this time and M considers the practice to be a benefit both to staff and the company. Staff operate with high levels of efficiency and absenteeism levels are low. The auditors of M have recommended that M stop these sessions, stating that they consider them to be a waste of time and a drain on resources. Which of the following aspects of M's culture would the auditors recommendation impact on?
A) Stories and myths
B) The organizational paradigm and values
C) Routines and rituals
D) Symbols

Accepted Answer

The answer of M is a car manufacturer in Country...

Question 16

Which THREE of the following frameworks are used solely to evaluate the external environment of an organization? (Choose three.)
A) Porter's Value Chain
B) Kaplan and Norton's Balanced Scorecard
C) PEST Analysis
D) Porter's Diamond
E) SWOT analysis
F) Porter's Five Forces Model

Accepted Answer

The answer of Which THREE of the following frameworks are...

Question 17

Which THREE of the following statements apply to Lynch's performance pyramid? (Choose three.)
A) The performance pyramid is designed to ensure that all activities support the organization's vision.
B) The right-hand side of the pyramid contains measures which are predominantly non-financial.
C) The left-hand side of the pyramid contains measures which have an external focus.
D) The business operating systems level includes the market-related Critical Success Factors.
E) The lowest level of the pyramid contains the day-to-day operational measures.
F) The business unit level includes measures which relate to internal systems needed to meet customers' needs.

Accepted Answer

The answer of Which THREE of the following statements apply...

Question 18

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?
A) Rational
B) Freewheeling opportunism
C) Incremental
D) Emergent

Accepted Answer

FarmCot Foods' strategy development appears to be emergent, as it evolved over time in response to external factors like tourism growth and consumer demand, rather than following a pre-planned, rational strategy.

Question 19

DDD is a business which sells entertainment products and 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 DDD's use of e-business? (Choose all that apply.)
A) Cost reductions because of lower overheads and cheaper procurement.
B) Better control of information through monitoring website activity.
C) Easier access to loan finance.
D) An increased use of tacit knowledge.
E) A reduction in labour turnover and higher morale.
F) Increased online revenues.

Accepted Answer

E-business can help DDD reduce costs by lowering overheads and procurement costs, and it can also help DDD increase revenues by selling products online.

Question 20

GV is a manufacturer and retailer of high quality suede gloves. GV makes all of its sales in country F, and is extremely profitable. After many successful years trading, GV has accumulated significant cash reserves and would like to grow the business organically. After some investigation work, GV has discovered an opportunity to sell leather shoes in country P. Which of the following strategic directions is GV taking if it pursues this opportunity, according to Ansoff's product / market matrix?
A) Product development
B) Market development
C) Related diversification
D) Market penetration

Accepted Answer

GV is pursuing related diversification by expanding into a new product line (leather shoes) while entering a new market (country P), which is different from its existing market and product line.

Exam 1: E3 - Strategic Management Question Tutorial

Which of the following categorizations would be correct, according to McFarlan's Strategic Grid, for a system which is critical to sustaining existing business but its future strategic importance is considered to be low?

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.)

Which THREE of the following issues relate to the Corporate Strategy of an organization? (Choose three.)

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

RRR is an insurance company which maintains an extensive database of its customer transactions over the last 10 years. RRR is developing a new product and has carried out a SWOT analysis. Within which of the following aspects of the SWOT analysis would RRR include its customer database?

Which THREE of the following frameworks are used solely to evaluate the external environment of an organization? (Choose three.)

Which THREE of the following statements apply to Lynch's performance pyramid? (Choose three.)

DDD is a business which sells entertainment products and 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 DDD's use of e-business? (Choose all that apply.)