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CIMA E3 - Strategic Management Question Tutorial Sample Questions:

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

2. JJJ is a publically quoted advertising agency. JJJ's competitive advantage is based on the expertise of its staff and its reputation in digital media advertising. JJJ has robust systems to protect its intellectual property. These include patents and copyrights. JJJ has also restricted access for most of its staff to its most sensitive data, such as studies of its customers' profitability.
JJJ's new Managing Director, Z, is concerned that when staff leave JJJ, the company loses whatever tacit knowledge they possess. These losses also impact on JJJ's reported profits. In order to remedy the losses of knowledge and the reduced profits Z wants to introduce a knowledge management strategy.
Which of the following steps support the introduction of a knowledge management strategy? (Choose all that apply.)

A) JJJ should convince staff of the benefits of sharing their tacit knowledge.
B) Z should gain the support of the Board of Directors.
C) JJJ should unfreeze current habits and standard operating procedures.
D) Z should set a target for reported profit.
E) JJJ should integrate knowledge management and management accounting.
F) JJJ needs to acquire and install appropriate hardware and software.

3. 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) Speed of processing the payment for parking charges.
B) Number of days of training for car park attendants.
C) Easy access to car parking spaces.
D) Reduction in complaints from customers.

4. DDD is a business which sells entertainment products and now wants to move to a position where it uses ebusiness 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) Easier access to loan finance.
B) Cost reductions because of lower overheads and cheaper procurement.
C) Better control of information through monitoring website activity.
D) A reduction in labour turnover and higher morale.
E) Increased online revenues.
F) An increased use of tacit knowledge.

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

Solutions: