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

2. A direct external change trigger is:

A) The introduction of new environmental protection policies by the government.
B) A general increase in the use of the Internet by society.
C) An economic recession in an organization's home country.
D) A powerful competitor forcing an organization to cut its prices.

3. You have been given responsibility, as a newly qualified management accountant, for delivering an ambitious project to centralize and computerize the accounts function within a medium-sized, geographically dispersed business. The timetable also requires the project to be delivered within a very short timescale with limited resources. You have built a team to deal with these proposed changes.
With regard to effective teams and change, which THREE of the following statements are correct? (Choose three.)

A) Teams that cross departmental boundaries can destroy shared values.
B) Teams enhance learning and address change directly through creating recommendations and new ideas.
C) Teams play minor roles in institutional change.
D) Teams that cross departmental boundaries can develop new performance criteria.
E) Individuals must become more than they were when working alone and must develop new commitments and behaviors.
F) Teams should continue after their purpose has been served.

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

5. M has been appointed as an external change agent to lead and implement a large scale re-structuring strategy which is being undertaken by a large bank. M has been appointed due to his extensive experience in a wide range of organizational re-structuring programmes. This re-structuring strategy will involve a large number of redundancies and the implementation of a new organization-wide management reporting system. M will need to work with staff from all departments and levels of the organization. The Board of Directors of the bank believes that an external change agent will bring more benefits to the change process than using an internal change agent.
Which of the following are the most likely benefits that could be achieved by the bank by appointing an external change agent to lead and implement the re-structuring strategy? (Choose all that apply.)

A) The bank can exploit the specialist expertise of the external change agent.
B) The change process should be less costly if an external change agent is appointed.
C) The speed of delivery of the change process will be quicker when using an external change agent.
D) As a dedicated resource, the external change agent can give more time to the change process.
E) The external change agent will be more objective in decision-making than an internal change agent.
F) The external change agent will have better relationships with the bank employees than an internal change agent.

Solutions: