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CIMA E3 - Strategic Management Question Tutorial Sample Questions:

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

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

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

3. 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) Routines and rituals
C) The organizational paradigm and values
D) Symbols

4. 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) SWOT analysis
E) Porter's Diamond
F) Porter's Five Forces Model

5. 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) Emergent
B) Incremental
C) Rational
D) Freewheeling opportunism

Solutions: