Deck 1: E3 - Strategic Management Question Tutorial

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

Answer 1

B

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.

Answer 2

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

Answer 3

C

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.

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

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.

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.

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.

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

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.

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.

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

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.

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.

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

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

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.

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

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.

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

Question 21

LLL is an international oil and gas exploration company. It is considering investing S300 million in developing new oil fields in Country D. For this it will need to obtain a license from the government of Country D. These new oil fields will bring much wealth to Country D because a large proportion of the revenue from the production of oil will be paid to the government as part of the licensing agreement. However, oil production in Country D will have some undesirable social effects, such as the threat of pollution, congestion to the roads and pressure on local amenities such as housing, electricity and clean water. Which of the following approaches to stakeholder management should LLL NOT undertake in order to enter Country D?

A) Issue free shares in a Joint Venture to develop oil fields to government ministers from Country D.
B) Commit to improving the local amenities and roads as a part of the application for a license in Country D.
C) Develop and circulate a promotional video showing the benefits enjoyed by other countries in which LLL operates.
D) Undertake stakeholder mapping to identify the interests of the most powerful players in the decision to grant a license to LLL.

Question 22

Which of the following would be likely to encourage an organization to use Scenario Planning? (Choose all that apply.)

A) The organization often experiences 'group-think', leading to a narrow view of the future.
B) Competitor's are increasingly using Scenario Planning as part of their strategy formulation process.
C) The organization has achieved all of its objectives and operates within a stable external environment.
D) The organization has not previously experienced any major surprises or expensive strategic mistakes.
E) Uncertainty in the industry is high, relative to management's ability to predict or adjust to change.

Question 23

'Big data' refers to datasets whose size is outside the ability of typical database software tools to capture, store, manage and analyze. Which of the following statements is NOT a valid statement with regard to 'big data'?

A) 'Big data' will require the right infrastructure, incentives and safeguards to address public concerns.
B) As technology advances overtime, the size of datasets that qualify as 'big data' will also increase.
C) The definition of 'big data' can vary by sector, depending on the software tools and dataset sizes common to a particular industry.
D) Sufficient analytical and managerial talent is available to exploit the opportunities associated with 'big data'.

Question 24

An organization must acquire suitable hardware and software in order to implement a knowledge management strategy so that knowledge can be stored and communicated. Which of the following would be appropriate systems to use in a knowledge management strategy? (Choose all that apply.)

A) Intranet
B) Local area network
C) Social media
D) Ledgers and journals
E) Internet
F) Groupware

Question 25

Which of the following would be correct considerations when evaluating the Feasibility of a strategy? (Choose all that apply.)

A) Will there be sufficient time to implement the strategy?
B) Will the strategy exploit the core competencies of the business?
C) Will the strategy maintain competitive advantage?
D) Will customers object to the strategy?
E) Will the business be able to deal with the responses of its competitors to the strategy?

Question 26

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

Question 27

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

Question 28

A direct external change trigger is:

A) A general increase in the use of the Internet by society.
B) An economic recession in an organization's home country.
C) A powerful competitor forcing an organization to cut its prices.
D) The introduction of new environmental protection policies by the government.

Question 29

TUV had an employee turnover rate of 25% among new recruits and was becoming short of skilled workers. The Board of TUV realized there was something dramatically wrong and called in consultants to assess the problem. The consultants recommended transformational change in that TUV should redesign the entire production system, change the placement of all equipment and the flow of work, redefine every job and give all workers new assignments. Which type of change did the consultants recommend for TUV?

A) Evolution
B) Reconstruction
C) Revolution
D) Adaptation

Question 30

Which of the following statements is NOT a role for Management Accountants involved in the strategy development process?

A) Consider and raise awareness of the ethical impact of proposed strategic decisions.
B) Integration of financial and non-financial information.
C) Writing the Annual Report.
D) Assist the Board in determining risk appetite.

Question 31

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

Question 32

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

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

Question 33

Ansoff has provided a product/market growth matrix which denotes possible strategic directions that an organization can follow. Which of the following statements correctly describe the strategic options generated by the matrix? (Choose all that apply.)

A) Diversification using new products in new markets.
B) Product development using new products in new markets.
C) Market development using existing products in new markets.
D) Market penetration using existing products within existing markets.
E) Market penetration using existing products in new markets.
F) Market penetration using new products within existing markets.

Question 34

M has been appointed as an external change agent to lead and implement a large scale re-structuring strategy which is being undertaken by a large bank. M has been appointed due to his extensive experience in a wide range of organizational re-structuring programmes. This re-structuring strategy will involve a large number of redundancies and the implementation of a new organization-wide management reporting system. M will need to work with staff from all departments and levels of the organization. The Board of Directors of the bank believes that an external change agent will bring more benefits to the change process than using an internal change agent. Which of the following are the most likely benefits that could be achieved by the bank by appointing an external change agent to lead and implement the re-structuring strategy? (Choose all that apply.)

A) The change process should be less costly if an external change agent is appointed.
B) The bank can exploit the specialist expertise of the external change agent.
C) As a dedicated resource, the external change agent can give more time to the change process.
D) The external change agent will be more objective in decision-making than an internal change agent.
E) The external change agent will have better relationships with the bank employees than an internal change agent.
F) The speed of delivery of the change process will be quicker when using an external change agent.

Question 35

BBB is a manufacturer that has been criticized in the financial press because it does not have a policy for sustainability. Which THREE of the following elements would be crucial to BBB successfully embedding sustainability into its activities? (Choose three.)

A) BBB should include sustainability targets in performance appraisal.
B) BBB's Board should make a commitment to sustainability.
C) BBB should give all its staff training in sustainability.
D) BBB should spend at least 0.1% of its Net Profit on sustainability projects.
E) BBB should employ a new public relations consultancy.
F) BBB should investigate the costs and benefits of establishing a sustainability department.

Question 36

A leading retail chain is undertaking environmental scanning as it is concerned that it is becoming uncompetitive and profits have started to fall. The Board of Directors is concerned that it will need to have a viable strategy to present to its shareholders at the next annual general meeting, in order to prevent shareholders' protests. The company has been reluctant in the past to offer an Internet shopping service. It now believes, however, that by offering this service and 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? (Choose all that apply.)

A) The company must be prepared to take customers' needs into account and be able to meet these needs.
B) In mature markets, existing customers provide the most likely source of future earnings.
C) CRM is about marketing to customers to obtain their loyalty, so customer research is not needed.
D) CRM utilizes marketing resources to retain, rather than simply attract new customers.
E) The CRM process needs to include increasing the range of products that will be offered to customers.