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CIMA E3 - Strategic Management Question Tutorial Sample Questions:

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

2. According to Porter's Five Forces model, which of the following would be evidence of high buyer power?

A) Buyers are fragmented and act independently of each other.
B) There is a concentration of buyers.
C) Products are not standardized and buyers cannot easily switch to another product.
D) There is a low probability of backward integration.

3. 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 3 is likely to be at the growth stage of its life cycle, at high risk of failure and further investment should be considered.
B) Product 1 is likely to be at the mature stage of its life cycle, have strong profitability and further investment should be considered.
C) Product 2 is likely to be at the growth stage of its life cycle, have weak profitability, poor cash generation and high capital requirements.
D) Product 2 is likely to be at the mature stage of its life cycle, is likely to benefit from significant economies of scale.
E) Product 1 is likely to be at the mature stage of its life cycle, operating in a contracting market and is fairly cash neutral.

4. 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) Issue free shares in a Joint Venture to develop oil fields to government ministers from Country D.
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) Undertake stakeholder mapping to identify the interests of the most powerful players in the decision to grant a license to LLL.

5. 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 consider the likely consequences of any decision in the long term.
C) To have regard for the interests of the company's employees.
D) To focus only on maximizing company profits.
E) To avoid conflicts of interest and of duties.

Solutions: