E3 Strategic Management (E3) Free Practice Test

Question 1

T is a management consultant. He was recently contracted by company XYZ to act as an external Change Agent in a program of change being undertaken. T's first task was to assist XYZ in clearly defining the outcomes of the change program and ensure that these were achievable. T also set up a number of change teams and led several workshops and team building exercises. Many of XYZ's staff were resistant to the change program. Therefore, T had to ensure that he created an appropriate vision for the change and was able to resolve any conflict which occurred during the change program.
Which THREE of the following are the key skills of a Change Agent demonstrated by T?

A. Independence

B. Negotiation skills

C. Managing up

D. Role Setting

E. Goal Setting

Correct Answer: B,D,E

Question 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. There could be a rise in the level of workplace accidents.

B. The extra production output will lead to an increase in inventory.

C. Production workers could consider the new target as unachievable.

D. The proposed bonus scheme conflicts with health and safety legislation.

E. Production workers will not be motivated by the proposed level of bonus.

Correct Answer: A,B,E

Question 3

A grocery store has analysed its recent sales and identified that customers who purchased fresh strawberries also purchased ice cream at the same time in 65% of transactions.
Which of the following best describes the results identified in the analysis carried out by the grocery store?

A. Classification

B. Association

C. Sequencing

D. Clustering

Correct Answer: B

Question 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. PEST Analysis

C. SWOT analysis

D. Kaplan and Norton's Balanced Scorecard

E. Porter's Diamond

F. Porter's Five Forces Model

Correct Answer: A,B,F

Question 5

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. Integrated reporting of the triple bottom line of Profits, People and Planet.

B. Providing financial information with all non-recurring expenditures and incomes removed.

C. Project evaluations that include the externalities as well as the cash costs.

D. Ensuring the organization adopts the lowest cost technologies and suppliers.

E. Measures of organization's use of non-renewable resources and environmental emissions.

Correct Answer: A,C,E

Question 6

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:

Correct Answer:

Question 7

Johnson. Scholes and Whittington described three criteria. 'Suitability, Feasibility and Acceptability' to evaluate potential strategies. Which of the following statements relate to the three criteria? Select ALL that apply.

A. Concerned with the expected performance outcome.

B. Concerned with the ability of the business to renew itself.

C. Concerned with the latest reported results

D. Concerned with whether the strategy could be made to work in practice.

E. Concerned with whether the strategy addresses the circumstances in which an organisation is operating.

Correct Answer: A,B,D,E

Question 8

Which of the following correctly defines Information Systems (IS) strategy?

A. Identifying the information needs of the Organization and aligning development to them.

B. The planning, organising, investment and control of information applications in the Organization.

C. Decisions on the hardware, software and communications solutions used in the Organization.

D. The roles and structure of information specialists in the Organization and their relationship with users.

Correct Answer: A

Question 9

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

A. Identify the non-value added processes.

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

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

D. Implement changes to protect key processes.

Correct Answer: D

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CIMA E3 Strategic Management (E3) Free Practice Test