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CIMA E3 - Strategic Management Question Tutorial Sample Questions:

1. 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?

A) Divest product T1 and Harvest product T5.
B) Harvest both product T1 and product T5.
C) Harvest product T1 and Divest product T5.
D) Divest both product T1 and product T5.


2. HHH is a manufacturer which has a bonus scheme for its production workers related to the speed of output.
HHH's products are very specialized and are made in a dangerous production environment. HHH's production workers usually work alone but sometimes, if there are problems in the production environment (for example, machinery breakdowns), they have to work in teams. When the production workers are working in teams they do not receive any bonus.
HHH's senior management is proposing to amend the current bonus scheme to encourage increased productivity. Under the current bonus scheme, production workers receive extra pay when they achieve 45% of their individual target: The target level is low because of the dangerous production environment and the need to occasionally work in teams.
Under the proposed bonus scheme, production workers will not receive any extra pay until they have achieved
90% of their individual target. Workers who achieve 90% or above of their individual target will be paid a 30% higher bonus.
Which THREE of the following problems is HHH most likely to encounter with the introduction of the proposed bonus scheme? (Choose three.)

A) Production workers will not be motivated by the proposed level of bonus.
B) The proposed bonus scheme conflicts with health and safety legislation.
C) There could be a rise in the level of workplace accidents.
D) Production workers could consider the new target as unachievable.
E) The extra production output will lead to an increase in inventory.


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

A) Entering new industries.
B) Meeting the needs of key customers.
C) Avoiding competitive disadvantages.
D) Acquisitions, disposals and diversification.
E) Leaving existing industries.
F) Achieving advantage over competitors.


4. According to Porter's Five Forces model, which of the following would be evidence of high buyer power?

A) There is a concentration of buyers.
B) Buyers are fragmented and act independently of each other.
C) There is a low probability of backward integration.
D) Products are not standardized and buyers cannot easily switch to another product.


5. BCA is a long established international airline. Which of the following represent Threats to BCA's business?
(Choose all that apply.)

A) A higher level of private car ownership.
B) A substantial rise in the price of oil.
C) A shortage of trained pilots in BCA.
D) A sudden increase in international terrorism.
E) Greater popularity of long-haul holidays.


Solutions:

Question # 1
Answer: C
Question # 2
Answer: A,C,E
Question # 3
Answer: B,C,D
Question # 4
Answer: A
Question # 5
Answer: B,C

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