E3 Exam Training Practice Tests (CIMA E3 Strategic Management)]

Question 1

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 growth stage of its life cycle, have weak profitability, poor cash generation and high capital requirements. B. Product 2 is likely to be at the mature stage of its life cycle, is likely to benefit from significant economies of scale. C. 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. D. Product 1 islikely to be at the mature stage of its life cycle, have strong profitability and further investment should be considered. E. Product 1 is likely to be at the mature stage of its life cycle, operating in a contracting market and is fairly cash neutral.

Correct Answer: A,C

Question 2

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

A. Demand-orientation B. Division / SBU / Function based C. Business-focused D. Management-focused

Correct Answer: D

Question 3

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?

A. Stars B. Question marks C. Cash cows D. Dogs

Correct Answer: A,C

Question 4

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?

A. Lecturer to student ratio. B. Percentage of students leaving STU with a first class degree. C. Expenditure per department. D. Average class size.

Correct Answer: B

Question 5

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?

A. Rappaport's Shareholder Value Analysis (SVA) B. Kaplan and Norton's Balanced Scorecard C. Lynch and Cross's Performance Pyramid D. Stern Stewart's Economic Value Added (EVA)

Correct Answer: B

Question 6

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.

Correct Answer:

Question 7

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. Role Setting B. Negotiation skills C. Independence D. Goal Setting E. Managing up

Correct Answer: A,B,D

Question 8

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.

A. A virtual organisation can look much larger than it actually is through the use of a range of partner suppliers and third party couriers. B. The quality of the products and services offered by the partner suppliers is always guaranteed and easy to control. C. Using partner suppliers who also supply products and services to competitors will help to increase the competitive advantage of the virtual organisation. D. The costs of operating a virtual organisation are relatively low as there is no need to operate from large premises or employ its own staff. E. Using the internet facilitates the assembly of the components that are needed to operate a virtual organisation.

Correct Answer: A,D,E

Question 9

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?

A. A national radio campaign to raise awareness of the club and the facilities on offer B. A 'refer a friend' scheme, offering a free golf lesson to every new member and the friend who referred them. C. Acquisition of a small profitable golf club overseas. D. An offer to new customers of a one month free trial period. E. Investment in a refurbished bar area and the development of a new outdoor driving range facility.

Correct Answer: B,D

Question 10

Which of the following uses apply to Porter's Value Chain?
Select ALL that apply.

A. Gives managers a deeper understanding of precisely what their Organization does. B. Prioritises operations that transform the various outputs into the final product. C. Identifies key processes that add value to the end customer. D. Helps assess the markets that the company currently operates in. E. Assesses improvements to management information.

Correct Answer: A,B,C,E

Question 11

Company V has obtained planning permission to build 20 wind turbines in town W. This will be a highly profitable project and help the Government in Country H meet targets for renewable energy. However, local residents and wildlife groups are extremely unhappy and have objected to the plans and threatened to cause disruption at the site of the proposed wind turbines once building work commences Which THREE of the following activities should Company V use, according to Cyert and March, to resolve these conflicting stakeholder objectives?

A. Make a donation of $10,000 to town W as a contribution towards the construction of a new town hall. B. Continue to build the wind turbines despite attempts to overcome the objections of the locals and the wildlife groups C. Offer staff a bonus when the project is successfully completed D. Negotiate with the wildlife groups to ensure their key concerns are understood, and implement an action plan to address concerns where appropriate E. Negotiate a 5% reduction in the price of the blade manufacture.

Correct Answer: A,B,D

CIMA E3 Strategic Management - E3 Exam Practice Test