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CIMA E3 - Strategic Management Question Tutorial Sample Questions:

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

2. STU is a hospital that is wholly funded by its national government. In the last five years it has seen its funding cut by over 30% due to budgetary pressure on the government, caused by a global recession. As a result, the senior management team of STU has had to make some very difficult decisions about prioritizing how it spends the funds it receives from the government. Its main strategies have been to reduce the number of administration staff and nursing staff by 20%, in order to reduce its costs. It has also stopped providing a number of services to patients, including its counselling services and its physiotherapy unit.
Which of the following strategies has STU adopted to manage its reduced funding? (Choose all that apply.)

A) Facilitation
B) Retrenchment
C) Divestment
D) Liquidation
E) Turnaround

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

4. DRAG DROP
YZ is a family-run business which manufactures and sells confectionery, employing almost 100 staff. It operates 10 shops in small towns in the north of country P.
Sales of YZ's products have decreased over the last 4 years due to competition from large supermarkets, internet shopping and a general economic downturn, which has hit the north of country P especially hard.
YZ's managing director has recently retired and the board decided to fill the vacancy with an external appointment. The new managing director plans to invest in new manufacturing technology, which would cut staffing levels by 15% and reduce wastage, allowing YZ to lower its prices. YZ's staff are very unhappy about these proposals, feeling that they will destroy YZ's family tradition and reputation that has developed over many years.
Select the correct descriptor for each of the forces for change below:
Select and Place:

Correct

5. 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) Publication on its website of ZYX's Code of Conduct and regular examples of staff displaying the highest standards of professional conduct.
B) Disciplinary actions, such as fines, for staff who do not display high ethical and professional standards.
C) Set performance targets in diversity and equality for its hotel senior managers.
D) Interview process for staff prior to employment, to assess their understanding of ethical and professional behavior.
E) Operate a system of reward incentives for staff who display high ethical and professional standards.
F) Induction and on-going staff training on ZYX's Code of Conduct and ethical and professional principles.

Solutions: