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  • Exam Name: Strategic Management
  • Last Update: Mar 1, 2024
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E3 Strategic Management Questions and Answers

Question # 6

SSS University wishes to introduce a new Car Park Management Strategy (CPMS). The aim of this strategy is to reduce the use of private cars and to encourage sustainable transport, such as cycling and public transport, by staff and students. SSS has decided to reduce the number of car parking spaces and introduce parking charges.

The Management Accountant has decided to use the Balanced Scorecard to help prepare a performance management system to assess the performance of the new CPMS.

Which of the following is an example of the Innovation and Learning perspective of a Balanced Scorecard for SSS?

A.

Easy access to car parking spaces.

B.

Number of days of training for car park attendants.

C.

Reduction in complaints from customers.

D.

Speed of processing the payment for parking charges.

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Question # 7

CIMA has conducted research into the implications of sustainability for business.  CIMA's report contained a number of key conclusions. Which of the following statements was NOT a conclusion in CIMA's report? 

A.

Strong ethical principles can add great value to a brand.

B.

Reporting on sustainability needs to provide hard evidence of the positive impact on society.

C.

Management Accountants have a responsibility to promote an ethics-based culture.

D.

The ethical tone within a business must come from the bottom.

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Question # 8

HHH intends to introduce a Balanced Scorecard to assist with its strategic policy formation and achievement of strategic plans. Which TWO of the following stakeholders are addressed by a Balanced Scorecard perspective?

A.

Shareholders

B.

National government

C.

Local government

D.

Managers

E.

Local residents

F.

Customers

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Question # 9

Which of the following is NOT an external driver that leads management to adopt greater sustainability in the activities of its business?

A.

Scientific research demonstrating the adverse impacts of global warming.

B.

Increased taxation of the emissions and waste created in industry supply chains.

C.

Customers' concerns, following widespread adverse publicity, over the very low pay of factory labour in manufacturing.

D.

Investor pressure for higher dividends.

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Question # 10

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

A.

Give managers a deeper understanding of precisely what their Organization does.

B.

Implement changes to protect key processes.

C.

Identify the key processes within the business that add value to the end customer.

D.

Identify the non-value added processes.

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Question # 11

Johnson, Scholes and Whittington developed the SAF framework to explain the factors that should be considered before pursuing a strategic option.

 

JJJ is a listed company that is considering launching a new product into its market.

 

Which of the following considerations affects the Acceptability of this new product launch?

A.

The potential impact of the launch of the new product on the profitability of JJJ.

B.

The availability of funds within JJJ for launching the new product.

C.

The amount of production capacity JJJ will require to make the new product.

D.

Whether the product is consistent with the strengths of JJJ.

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Question # 12

YZ is a family-run business which manufactures and sells confectionery, employing almost 100 staff. It operates 10 shops in small towns in the north of country P. Sales of YZ's products have decreased over the last 4 years due to competition from large supermarkets, internet shopping and a general economic downturn, which has hit the north of country P especially hard.

YZ's managing director has recently retired and the board decided to fill the vacancy with an external appointment. The new managing director plans to invest in new manufacturing technology, which would cut staffing levels by 15% and reduce wastage, allowing YZ to lower its prices. YZ's staff are very unhappy about these proposals, feeling that they will destroy YZ's family tradition and reputation that has developed over many years.

Select the correct descriptor for each of the forces for change below:

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Question # 13

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.

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Question # 14

In Johnson, Scholes and Whittington's model of rational strategy which of the following stages appear?

Select ALL that apply.

A.

Analysis

B.

Choice

C.

Feasibility

D.

Implementation

E.

Sustainability

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Question # 15

'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'? 

A.

As technology advances over time, the size of datasets that qualify as 'big data' will also increase.

B.

The definition of 'big data' can vary by sector, depending on the software tools and dataset sizes common to a particular industry.

C.

Sufficient analytical and managerial talent is available to exploit the opportunities associated with 'big data'.

D.

'Big data' will require the right infrastructure, incentives and safeguards to address public concerns.

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Question # 16

Which of the following did Johnson, Scholes and Whittington identify as success criteria for the evaluation of strategic options?

 

Select ALL that apply.

A.

Suitability

B.

Affordability

C.

Feasibility

D.

Acceptability

E.

Durability

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Question # 17

Corporate political activity can be seen as a proactive attempt by a company to influence government decision-making. In particular, lobbying represents a direct but often private attempt by businesses to influence a government's decision-making.

 

Which of the following is NOT a legitimate and private form of lobbying?

A.

Monitoring

B.

Advocacy

C.

Application of pressure

D.

Undisclosed party financing

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Question # 18

A has a portfolio of business units. One of A's units has a total market share of 25% and its largest competitor has a market share of 20%. In the last year the overall market of this business unit has declined by 2%, although its revenues have increased by 12%. following a successful marketing campaign.

According to the BCG matrix. A's business unit would be classified as which of the following?

A.

Dog

B.

Cash Cow

C.

Star

D.

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Question # 19

QQQ has identified a new strategy which is both Suitable and Feasible However, it will not be Acceptable to some groups of QQQ's stakeholders who have publicly objected to it.

Which THREE of the following statements are correct ways of resolving competing stakeholder objectives, as suggested by Cyert and March?

A.

Negotiate with the key stakeholders to achieve an acceptable compromise.

B.

Conduct research into the causes of the stakeholders' objectives.

C.

Offer to fully address one group of stakeholders' objections now with a promise to meet the other groups' objections in the future

D.

Threaten to close down the business unless the objectors withdraw their opposition

E.

Publish more information about the new strategy including its profit potential.

F.

Exercise the Board of Directors' power and implement the strategy despite the objections.

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Question # 20

OP and QR are the only two providers of electricity in country S. The demand for electricity is price-inelastic; customers regard electricity as essential and therefore demand does not change significantly if its price changes. However, customers will readily switch suppliers to obtain lower prices.

Applying game theory, select the correct long-term revenue impact for each company for each of the following pricing decisions:

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Question # 21

PQR is a software design company. The Board of PQR has always openly encouraged partnerships with a wide range of designers and other Organizations in its industry, to continually develop and enhance the services it offers and to utilise the expertise and knowledge of a range of individuals and Organizations. 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 adept Organization, as defined by Kanter, has PQR demonstrated?

A.

Environmental awareness

B.

Openness to collaborate

C.

Sophisticated systems

D.

Imagination to innovate

E.

Continual service development

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Question # 22

JKL Plc manufactures and sells a range of consumer electronic products. it is organised into four strategic business units (SBU's), each responsible for a specific business segment. 

  E3 question answer

Which business segment would benefit most from a Build strategy?

A.

Personal Computer

B.

Tablet

C.

Smartphone

D.

Personal Music Player

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Question # 23

QR is a conglomerate with two divisions, A and B. Given the information below, select the most appropriate strategy for each division to implement.

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Question # 24

BBB is a global online recruitment agency It has over 20 million clients registered worldwide and estimates that it holds up to 80 terabytes of data about its clients. BBB gathers data about its clients from a wide variety of sources, such as client registration data input directly to the website, client browser and search histories and social media activity, all of which are used to build up a view of its clients.

Client data changes on a frequent basis and must be updated continually. New clients join the site regularly and the employment needs of clients often change. BBB utilises Big Data Analytics to evaluate its client data.

Which of the following features of Big Data are evident in BBB?

Select ALL that apply

A.

Variety

B.

Volume

C.

Velocity

D.

Veracity

E.

Visibility

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Question # 25

Which of the following is NOT a key attribute of a successful stretch target?

A.

Set at a level which is easily achievable.

B.

Set at a level which motivates staff to perform at their highest level.

C.

Staff must understand the reason for the stretch target set.

D.

Encourages ethically responsible behaviour to achieve the stretch target.

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Question # 26

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?

A.

Identification of the information needs of LLL's customers and key stakeholders.

B.

Identification of management responsibilities and processes within LLL.

C.

Identification of what information is needed by LLL to enable it to achieve its overall business strategy.

D.

Identification of the hardware and software required to manage all of the information within LLL.

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Question # 27

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.

A.

BBB will gain a first mover advantage.

B.

It provides a market development opportunity for BBB.

C.

There is stakeholder approval for the investment.

D.

It is essential given the strategic threats to BBB.

E.

There are sufficient investment funds available.

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Question # 28

BBB has often encountered difficulties when it has introduced strategies which involve Organizational change. BBB is about to enter a period of much change and has decided to appoint one or more change agents to help to manage this. Select ALL of the statements that apply in respect of a change agent. 

A.

Sensitive to the impact of change on all stakeholders.

B.

Tolerant of ambiguity and uncertainity.

C.

Skilled communicator with colleagues and subordinates.

D.

Skilled at successfully meeting budget targets.

E.

Worked in three similar change environments.

F.

Willingness to drive through difficult decisions.

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Question # 29

ABC is an independent training provider in Country F. It provides training in business related subjects to a wide range of corporate customers. All of its tutors must possess a nationally accredited training qualification before being allowed to teach and all of its courses follow nationally accredited programmes which are externally monitored. This is considered to be a critical aspect of its business reputation.

ABC has one major competitor, XYZ, within Country F. XYZ offers similar courses to ABC but its tutors do not have to have an accredited training qualification and its courses do not follow the national accredited programmes. The style and content of courses varies significantly between XYZ's centers.

There are a number of universities which offer nationally accredited courses within Country F. ABC does not consider these as competitors because typically they attract students wishing to undertake degree courses. The average university pass rate for nationally accredited programmes is currently higher than ABC's.

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

A.

Process

B.

Internal

C.

Competitor

D.

Strategic

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Question # 30

JJJ is about to undergo a period of rapid and far-reaching change. JJJ's Chief Executive has heard about work published by Beer and Nohria, 'Theory E' and 'Theory O', which identified reasons for business change initiatives failing. Select THREE of the following circumstances where it would be appropriate to use a 'Theory E' approach. 

A.

Shareholder value is the main concern.

B.

The Chief Executive is going to use a 'Top-down' approach.

C.

The change will be large and knowledge-driven.

D.

The change will be small and process-driven.

E.

The change is emergent and participative.

F.

The change is a response to new legislation.

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Question # 31

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

A.

Remuneration

B.

Leadership

C.

Disclosure

D.

Accountability

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Question # 32

E is a company run by a well balanced Board of Directors. E is performing well, but is looking to reduce costs in the current year Which of the following activities would lack integrity'' Select ALL that apply.

A.

Telling potential customers that E's nearest competitor is in financial trouble when it is not.

B.

Hiring the grandaughter of the CEO on E's graduate recruitment scheme following an extensive interviewing process.

C.

Attempting to obtain a refund on items supplied by supplier S, on the false basis that the goods were damaged.

D.

Allowing customer H to be supplied with a slightly sub-standard product for a small agreed discount

E.

Reducing waste and inefficiencies across the company as appropriate.

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Question # 33

University researchers want the government of Country Y to invest in the creation of a database of information about the lives of people who have lived in the country during the past 300 years. 

 

Population information is based on official registers of data about individual people. This data will include the person's name, the dates they were born, the names of their parents, the names of partners if they decide to marry, the names and dates of birth of their children and, finally, the person's date of death and cause of death. In the past this information was recorded on paper by hand, but today there are an increasing number of computerised databases that record this information. This will include data about the 58 million people alive in Country Y at the moment.

 

Additional data may come from government questionnaires that are circulated once every 10 years and completed by every household in Country Y all on the same day of that year. 

 

The system is intended to help the researchers analyse demographic change but it will also be useful to people who want to identify who their ancestors were and the links between families.

 

What THREE obstacles will the University researchers face in developing and implementing this system?

A.

This is a very large and expensive project for which the benefits will not be clear until it has been implemented.

B.

The data will be in many different forms and will be very hard to standardise and put into digital form.

C.

There may be resistance from members of the population to sharing this data and making it public.

D.

No database systems have been developed yet that are able to store, cross reference, search and report on this much data. 

E.

The individual data does not provide a comprehensive picture of the factors the researchers are interested in.

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Question # 34

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

 

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

A.

Mission statements should be specific enough to impact Organizational behaviour.

B.

Mission statements should communicate the Organization's distinctive advantages.

C.

Mission statements should be flexible, realistic and attainable.

D.

Mission statements should be aspirational and capture the imagination of stakeholders. 

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Question # 35

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? 

A.

Big Data analysis

B.

Data Mining

C.

Knowledge Management

D.

Data Warehousing

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Question # 36

QQQ is a family run business which manufactures and sells chocolate. QQQ employs 80 staff in its factory and shops. It operates 10 shops within a number of small towns in the northern region of Country P. In the last four years, demand for QQQ's products has decreased, as customers in its local region are increasingly shopping in large supermarkets and out of town facilities, which are more convenient and tend to offer cheaper priced goods. The recent economic recession has hit the region hard and many local people have moved away to find work in other regions of the country. The internet has also impacted upon its business, as many customers are now making purchases of chocolate via the internet.

The Managing Director (MD) of QQQ has recently retired and the Board took the decision to make an external appointment to replace him. The new MD believes that QQQ needs to invest in new technology within its factory. This would reduce staffing levels by 15% and would reduce wastage and costs, allowing QQQ to offer more competitively priced products. He also believes that QQQ must invest in its own website. However QQQ's staff are very unhappy with these proposals. Some of the family members of the Board are concerned that this change will destroy the family tradition and reputation of QQQ that has been built up over many years.

Select the correct descriptor for each of the forces for change below.

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Question # 37

Select the quality associated with effective coaching and mentoring for each of the descriptions below:

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Question # 38

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

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Question # 39

You are responsible for managing a small team of people tasked with implementing a new environmental management reporting system across all Group subsidiaries. Senior management teams within subsidiary businesses are increasingly resisting the introduction of the system. Place your recommended approach for dealing with each of the following comments.

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Question # 40

AAA is a car manufacturer which has undertaken a strategy to lobby a regional authority to include Its flagship hybrid model in a regional initiative to grant low-emission cars access to faster moving vehicle lanes. These faster vehicle lanes were historically only available to cars carrying passengers. Given the benefits of AAA's low emission vehicles, AAA's cars were authorised to make use of the faster lanes, even when no passengers were on board providing AAA with a decisive competitive edge.

Which of the following strategies is AAA pursuing?

A.

An environmental strategy.

B.

A sustainability strategy.

C.

A non-market strategy.

D.

A market strategy

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Question # 41

Johnson. Scholes and Whittington define strategy as the direction and scope of an organisation over the long term'. Which THREE of the following are advantages of deliberate long-term planning1? 0 A. The organisation has a competitive advantage over others in its industry that do not use long-term planning.

B. The organisation will comply with external reporting standards

C. Long-term planning will enable equal importance to be given to the different perspectives of the organisation's Balanced Scorecard.

D. The organisation's mission, objectives and targets are made explicit which will improve goal congruence.

E. Management will have to generate ideas using their experience and ability to innovate.

F. By undertaking detailed analysis management can identify key risks.

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Question # 42

XYZ is a local tourist attraction. XYZ has a website on which it advertises all of its forthcoming events. XYZ's customers can also use the website to book tickets for these events and can also contact XYZ by email. XYZ's website also uses a range of interactive technologies including geographical location and map facilities and links to external information sites such as the local tourism board and local hotel listings.

 

Which of the following best describes the range of interactive technologies used by XYZ within its website? 

A.

Social media

B.

Information Sharing

C.

Mash-up

D.

Competence syndication

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