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CIMA E3 - Strategic Management Question Tutorial Sample Questions:

1. 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 cafa, 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) Incremental
B) Emergent
C) Rational
D) Freewheeling opportunism

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

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

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

4. 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) 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.
B) A company's Code of Business Conduct can be rules based.
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) As a CIMA qualified Management Accountant you must follow CIMA's Code of Ethics.
E) 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.

5. DF Company is undertaking a strategic review of its activities and has asked you to explain how a Force Field analysis would assist in the review process.
Which of the following statements would be most appropriate?

A) As part of DF's strategic review, identify forces facilitating the need for proposed change.
B) Provide a framework for identifying forces for and against the proposed changes within DF.
C) Identify influential senior managers who will drive through changes in DF's strategic direction.
D) Identify forces facing DF's activities that may create barriers and resistance to change.

Solutions: