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


3. Directors have a duty to shareholders and other stakeholders and are required to promote the success of the company.
Which THREE of the following are valid roles and responsibilities of directors? (Choose three.)

A) To be responsible for keeping all external stakeholders satisfied.
B) To avoid conflicts of interest and of duties.
C) To consider the likely consequences of any decision in the long term.
D) To focus only on maximizing company profits.
E) To have regard for the interests of the company's employees.


4. Z is a medium-sized UK based accounting practice. Z operates a graduate training scheme. The trainees are given an induction and then placed on a three-year training programme designed to help develop professional skills and experience.
The training programme has been in existence for many years. However, there is no clear consensus amongst the partners of Z about what the trainees should be able to do on completion of the programme and therefore what the training programme should emphasize. This lack of clarity is affecting the morale and commitment of the trainees and significant numbers are failing the programme or leaving to join a rival firm.
Z's HR Department recognizes the need for committed and well motivated accountants to meet the increased expectations of clients and the competition from rival firms. The HR Department has identified changes to the training programme that can be implemented gradually through a series of initiatives.
Which TWO of the following statements regarding the change required in Z are correct? (Choose two.)

A) Understanding which day-to-day behaviors to reinforce within the training programme, is about 'routines and rituals' according to the Cultural Web.
B) The need to manage the competitive position is an example of an 'external direct trigger' for change.
C) The skills, abilities and competences of the organization's employee's are a 'hard' factor according to the McKinsey 7 S model.
D) The plans to combat competition would be considered as a 'structure' factor according to the McKinsey 7 S model.
E) The change would be classified as a 'revolutionary change' according to Balogum and Hope Hailey.


5. Plush is a medium-sized hotel which recently opened on the outskirts of a city which is popular with tourists. It has a sophisticated website which allows customers to pre-book rooms and additional items, such as meals in its restaurant and tickets for popular tourist attractions in the city.
Plush has listed its website on a popular hotel price comparison website, which allows customers to compare prices and facilities of hotels in the same area and this has resulted in over 60% of Plush's customer bookings so far.
Since listing on the price comparison website, the Sales Manager of Plush has noticed that the prices offered by its nearest competitors have reduced dramatically and their range of special offers have also increased.
Which TWO of Porter's Five Forces have been most affected by the use of the price comparison website by the hotels in the same area as Plush? (Choose two.)

A) Threat of substitutes.
B) Threat of new entrants.
C) Bargaining power of suppliers.
D) Competitive rivalry.
E) Bargaining power of customers.


Solutions:

Question # 1
Answer: D
Question # 2
Answer: C,D
Question # 3
Answer: B,C,E
Question # 4
Answer: B,C
Question # 5
Answer: A,E

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