E3 Practice Exam Questions and Answers

EFG is a private hospital. It specialises in state-of-the-art laser surgery, an area which has developed rapidly in the last 10 years. Most of the staff of EFG are used to change, as developments in technology, new surgical techniques and customer demands have changed rapidly during this time. However, in the last three years the economic recession has had a significant impact upon EFG, with the numbers of private customers reducing and its profits falling sharply.

The Board of Directors has recently announced that it is to restructure the Organization and rationalise some of the services it offers. A small number of staff will be made redundant and those remaining will have to take on extra responsibilities with no extra pay. Also, the current generous overtime payments are to be drastically cut. Many staff have expressed concern at the impact that these changes will have on them.

The Board of Directors has clearly communicated the economic reasons for change to the staff through several meetings and are operating an open door policy, whereby staff can discuss the changes with their line managers at any time. 

Which of the following, according to Kotter and Schlesinger,  is the MOST likely reason for resistance among EFG's staff?

Which THREE of the following are classified as business operating systems measures within the Performance Pyramid?

LMN sells fashion clothing at competitive prices through its own retail stores. The clothes are manufactured for LMN by contractors in other countries.  

In the past 4 years LMN has progressively lost market share to rival shops and online stores. This has been the consequence of poor designs, poor quality, and poor customer service.

In the past 3 years LMN tried to respond to this declining market share in several ways:  

   • Used e-sourcing to increase the number of suppliers LMN uses in order to obtain a larger choice of designs.

   • Used e-procurement to buy in greater quantities to reduce cost per item.

   • Warned each supplier that LMN will use a different supplier unless prices are reduced and better designs provided.

   • Closed its own design studio to save costs, relying instead on its suppliers for designs.

   • Reallocated budgets away from funding for customer research towards increased advertising.

   • Avoided costs of product returns by making it difficult for customers to return items for a refund.

   • Cancelled investment in a Customer Relationship Management system (CRM) to use the funds to finance its rising inventories. 

You have been asked to suggest ways to improve the supply chain of LMN. This requires you to make a presentation to the Board of LMN.

Which THREE of the following techniques would improve the supply chain of LMN?

HH is an outdoor theatre which is based in the capital city of country N. Tickets for shows can be booked at the ticket office or online. HH has identified the following critical success factors (CSFs):

An excellent, online ticket booking system

Customer satisfaction

Which of the following would be suitable key performance indicators (KPIs) for HH? (Choose all that apply.)

M is a car manufacturer in Country

C.  

M's staff are paid during this time and M considers the practice to be a benefit both to staff and the company. Staff operate with high levels of efficiency and absenteeism levels are low.

The auditors of M have recommended that M stop these sessions, stating that they consider them to be a waste of time and a drain on resources.

Which of the following aspects of M's culture would the auditors recommendation impact on?

DF Company is undertaking a strategic review of its activities and has asked you to explain how a Force Field analysis would assist in the review process.

Which of the following statements would be most appropriate?

Mayo defined knowledge management as the management of the information, knowledge and experience available to an Organization. Which THREE of the following are steps in the development and implementation of a knowledge management strategy?

MMM operates leisure parks in Country S. a mature economy in Europe. These are parks that are popular with people between the ages of 8 and 25 years who visit them to ride on the high speed roller-coasters and to visit other attractions at the parks. Nearly 60% of visitor expenditure is to buy meals and drinks at the park MMM estimates that 20% of its visitors travel to its parks from outside Country S.

Which THREE of the following environmental changes will have the greatest impact on MMM in the next five years?

DDD is a business which sells entertainment products and now wants to move to a position where it uses e-business as a fundamental part of its business strategy.

Which of the following benefits would result from DDD's use of e-business? (Choose all that apply.)

QQQ is a family run business which manufactures and sells chocolate. QQQ employs 80 staff in its factory and shops. It operates 10 shops within a number of small towns in the northern region of Country P. In the last four years, demand for QQQ's products has decreased, as customers in its local region are increasingly shopping in large supermarkets and out of town facilities, which are more convenient and tend to offer cheaper priced goods. The recent economic recession has hit the region hard and many local people have moved away to find work in other regions of the country. The internet has also impacted upon its business, as many customers are now making purchases of chocolate via the internet.

The Managing Director (MD) of QQQ has recently retired and the Board took the decision to make an external appointment to replace him. The new MD believes that QQQ needs to invest in new technology within its factory. This would reduce staffing levels by 15% and would reduce wastage and costs, allowing QQQ to offer more competitively priced products. He also believes that QQQ must invest in its own website. However QQQ's staff are very unhappy with these proposals. Some of the family members of the Board are concerned that this change will destroy the family tradition and reputation of QQQ that has been built up over many years.

Select the correct descriptor for each of the forces for change below.

Corporate political activity can be seen as a proactive attempt by a company to influence government decision-making. In particular, lobbying represents a direct but often private attempt by businesses to influence a government's decision-making.

Which of the following is NOT a legitimate and private form of lobbying?

Select the label which best defines the periods of decline outlined in the situations presented below.

You have applied for a job with a large accountancy practice and have been requested to attend for an interview. You have also been informed that you will be required to give a ten minute presentation on Corporate Political Activity (CPA).

Which are valid statements with respect to Corporate Political Activity?

Select ALL that apply. 

In Johnson, Scholes and Whittington's model of rational strategy which of the following stages appear?

Select ALL that apply.

PQ is an international airline.

In accordance with Porter's Value Chain, select “Primary” or “Support” for each of the activities listed below:

Collaborative leadership is particularly useful in situations where "no one is in charge", where the issues or problems are so complex that no one person or entity has either the information or the power to change.

Which of the following would facilitate the role of a collaborative leader effectively?

Place 'Yes' or 'No' next to each Role.

Which of the following is NOT a fundamental principle specified in CIMA's Code of Ethics?

University researchers want the government of Country Y to invest in the creation of a database of information about the lives of people who have lived in the country during the past 300 years. 

Population information is based on official registers of data about individual people. This data will include the person's name, the dates they were born, the names of their parents, the names of partners if they decide to marry, the names and dates of birth of their children and, finally, the person's date of death and cause of death. In the past this information was recorded on paper by hand, but today there are an increasing number of computerised databases that record this information. This will include data about the 58 million people alive in Country Y at the moment.

Additional data may come from government questionnaires that are circulated once every 10 years and completed by every household in Country Y all on the same day of that year. 

The system is intended to help the researchers analyse demographic change but it will also be useful to people who want to identify who their ancestors were and the links between families.

What THREE obstacles will the University researchers face in developing and implementing this system?

TTT is a conglomerate with two divisions, AAA and BB

B.  

BCD is a small private hospital providing elective surgery to patients. Elective surgery is not essential to the patient's health and can be regarded as a luxury.

Match the performance measure to the strategic goal and match the direction of improvement to each measure.

The future can be viewed as consisting of a large number of alternatives. Forecasting techniques have been designed to assist decision-making and planning.

Which TWO of the following statements are correct regarding the use of trend analysis as a forecasting tool?

Which of the following uses apply to Porter's Value Chain?

Select ALL that apply.

The Chief Executive Officer (CEO) of Company Y has recently attended a series of presentations on the six key roles that the World Economic Forum (WEF) recommend organisations fulfil in order to succeed in the digital age.

The CEO is particularly interested in changing the focus of Y from a five year, to a one year planning cycle, with more focus on experimentation and less focus on long-term planning.

Which of the six roles suggested by the WEF is the CEO particularly interested in?

PQR is a charity which has an excellent reputation within its home country. PQR employs over 300 highly experienced staff and has 200 skilled volunteers. PQR's funding mainly comes from donations from the public but its public profile is low compared to larger, more publicized charities.

Due to a recent recession, public donations to PQR have fallen in the last five years, but demand for its services continues to grow.

The government of the country in which PQR operates is encouraging greater collaboration between charities and there have been several recent successful mergers within the charity sector. PQR has recently been approached by a high profile and well funded charity, DDD, with a merger proposal. DDD offers complementary services to those offered by PQR.

Which TWO of the following factors would most likely be considered as an ’opportunity’ for PQR? (Choose two.)

In order to organize the value-adding activities to support a chosen strategy, Porter's Generic Strategies are often applied within an organization's value chain.

Against each of the activities listed below, select the Generic Strategy which best defines the strategic approach being taken.

BBB operates a small chain of coffee shops within Country X. a mature economy in northern Europe. BBB was established 20 years ago and currently employs over 150 staff in 25 shops located in major towns and cities throughout Country X. BBB attracts a wide range of customers, who are attracted by its extensive menu of coffee products and food Customers can either consume their purchases within the shop or can take their purchases away.

Which THREE of the following external environmental changes would have the greatest impact on BBB in the next three years?

GGG is a manufacturer of four different components produced in four separate facilities. The Production Director has sufficient funds to modernise one of the facilities.  GGG's decision rule in these circumstances is that investment is permissible in either a 'Cash Cow' or a 'Star' but not a 'Dog' or a 'Problem Child?'. Which facility should be modernised?

A company runs a distribution warehouse. Its information systems constantly monitors inventory levels, with automatic re-order processing occuring with suppliers when inventory items reach a specified level. It operates a robotics system which automatically picks inventory from its location in the warehouse and delivers it to the pick-up area. The company also has a large database of customer information which it uses to analyse buying behavior and sales trends so that it can provide customers with relevant and targeted marketing information.

Which THREE of the following activities of the Value Chain have been affected by the use of IT/ IS?

You are a Management Accountant working for a logistics firm that wants to build collaborative relationships with each of its key clients.

Which of the following changes to the management accounting function would you recommend to help the development of collaborative partnerships with a client?

Select ALL that apply.

As a CIMA qualified management accountant working within a manufacturing company, you are subject to both CIMA's Code of Ethics and your company's Code of Business Conduct.

Which TWO of the following statements are TRUE? (Choose two.)

Which of the following would be correct considerations when evaluating the Feasibility of a strategy? (Choose all that apply.)

A direct external change trigger is:

Mission statements set out the purpose of an Organization to a range of stakeholders who have an interest in what the Organization does. As an employee, you have been asked to assess the effectiveness of your Organization's mission statement.

Which of the following would NOT help the effectiveness of a mission statement?

Which of the following is NOT included in the Information Systems Strategy (ISS) of Earl's three levels of information strategy?

S is a hybrid car manufacturer. S relies on strong social media presence and online marketing campaigns to drive customers to its website. S prioritises measuring and improving active usage metrics.

Which of the following metrics does S prioritise?

Select ALL that apply.

P owns an internet-based business, called GWiz. based in Country

G.  

G.  

P is a member of a local small business trade federation and has been asked to make a presentation to its members on her experience of running GWiz as a 'virtual organisation'.

Which of the following statements could P correctly make on the benefits of virtual organisations?

Select ALL that apply.

Company Y is a global business selling a selection of technological items including phones, laptops and other computer related items. In addition Y sells accessory items, music downloads, apps: digital books and video downloads including films and television series through a cooperative partnership with other companies, designed to create value for the customer.

Which of the following terms best describes what Y has created?

HHH is an international distribution company which operates a number of large distribution warehouses. HHH employs over 10,000 staff who operate the warehouses 24 hours per day and process over 500,000 packages and parcels each day. HHH operates in a highly competitive market and the senior management team recognize the importance of focusing upon its Critical Success Factors (CSF's). However, some senior managers are confused as to the difference between CSF's and Key Performance Indicators (KPI's).

Which of the following are Critical Success Factors for HHH? (Choose all that apply.)

DEF is a medium sized business which manufactures children's clothing. In the last 5 years demand has steadily increased and DEF is struggling to meet this demand within its current manufacturing capacity. DEF's current manufacturing machinery was installed over 10 years ago and now requires updating, if DEF is to survive in the marketplace. 

DEF has established that the latest manufacturing technology would cost $2 million. This would be funded by the shareholders. It would payback within 2 years and would allow DEF to double output from its current level within this 2 year period. It will also improve product consistency and quality. However, it will result in the loss of 20% of DEF's manufacturing staff, most of whom are low paid and low skilled.

DEF is currently reviewing this proposed investment strategy, in terms of whether it meets the criteria of Suitability, Acceptability and Feasibility.

Which of the following correctly identifies the criteria which are met, in regard to DEF's proposed investment strategy?

Kotter and Schlesinger identified six change styles. Which of the following situations would be better managed by a Negotiation and Agreement style?

STU is a government funded university in Country V. The senior management team of STU uses the 3 E's approach (Economy. Efficiency and Effectiveness) to evaluate the performance of the university and to set performance measures.

Which of the following measures would be categorised as a measure of the 'Effectiveness' of STU, based upon the 3 E's approach?

AAA manufactures and sells a range of travel suitcases. One model, the 'Executive'  has seen sales growth of around 3% for the last two years, following strong growth since its introduction eight years ago. This slow down in the 'Executive' sales growth is largely due to AAA's competitors offering products in direct competition with the 'Executive'. AAA has therefore had to reduce its price to match those of its major competitors. AAA has also recently upgraded the features of the 'Executive' model to include a variety of different colours and materials. It has also launched a marketing campaign to promote the benefits of the 'Executive' model against its competitors products.

Which stage of the product life cycle has the 'Executive' model of suitcases reached?