E3 Questions and Answers

Which THREE statements about scenario planning are correct?

Which of the following would be likely to encourage an organization to use Scenario Planning? (Choose all that apply.)

RRR is a state-funded hospital serving a major city. It is under political pressure to reduce the waiting times of patients requiring surgical operations who need to stay at the hospital for several nights. The doctors blame a lack of bed spaces and are calling for more investment in extra beds.

You have been conducting some research into the problem and have discovered the following problems affecting the utilisation of the existing beds at RRR:

   • many patients stay extra nights due to lack of communication with the health professionals needed to monitor the patients at home

   • beds are left empty each day when patients miss their admission date but there are no processes to inform other patients to offer them the space

   • patients are admitted on days when there are no spaces available on the special equipment needed to treat their particular condition

Which THREE  linkages between Primary Activities in the Value Chain of RRR need to be improved to provide extra bed spaces at RRR?

An IT project is currently being undertaken by VVV, a large university. The project is to design and install a secure information system network for all academic staff and administrative staff in the university. The Executive Board of VVV has insisted that the key objective of the project team is to track and monitor how the information system is being used by the academic staff and the administrative staff once it is implemented.

Which of the following would be an appropriate performance measure for the key objective set by VVV's Executive Board?

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.)

Company LL is a well established, reputable company which specialises in providing insurance call centre services to the insurance industry. It has recently won a large contract to provide its services to a multi-national insurer. LL's staff are highly trained in insurance matters and many have worked for LL for many years. 

LL undertakes long-term resource planning activities and has identified that during the winter months, when there will be more customers ringing up to make insurance claims, it will potentially need to employ more staff.  The Board has decided that rather than recruit its own staff, it will use an employment agency to supply manpower resources as required. The people supplied will be employed on a temporary basis by LL and they will work alongside the other call centre staff. However, they will work at a lower pay rate and will only be paid for the actual hours they work.

This change will lead to a shift in the working environment, the routine and the composition of the group.

Which THREE statements apply in respect of this proposed change?

LMN is a fast food manufacturer that makes 'Ready-meals'.

Place the appropriate stage of the Value Chain against each of the activities below:

Which of the following distinguishes a learning curve effect from a learning Organization?

JJJ is a publically quoted advertising agency. JJJ’s competitive advantage is based on the expertise of its staff and its reputation in digital media advertising. JJJ has robust systems to protect its intellectual property. These include patents and copyrights. JJJ has also restricted access for most of its staff to its most sensitive data, such as studies of its customers' profitability.

JJJ's new Managing Director, Z, is concerned that when staff leave JJJ, the company loses whatever tacit knowledge they possess. These losses also impact on JJJ's reported profits. In order to remedy the losses of knowledge and the reduced profits Z wants to introduce a knowledge management strategy.

Which of the following steps support the introduction of a knowledge management strategy? (Choose all that apply.)

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?

'Big data' refers to datasets whose size is outside the ability of typical database software tools to capture, store, manage and analyze.

Which of the following statements is NOT a valid statement with regard to 'big data'?

Porter suggests that competitive advantage can be attained by organising value-adding activities in support of the generic strategies which he identified.

Place the appropriate generic strategy against each of the value-adding activities.

Which of the following statements is NOT a role for Management Accountants involved in the strategy development process?

A Porter states that competitive advantage can be gained by following one of three generic strategies.

Place the appropriate generic strategy against each of the statements below.

BCD is an independent training provider in Country P. It provides training to a wide range of corporate customers in business related subjects. All of its tutors must possess a nationally accredited training qualification before they are allowed to teach. Also, all of its courses follow nationally accredited programs and are externally monitored. This is considered to be a critical aspect of its business reputation.

BCD  has one major competitor, JKL, within Country P. JKL offers similar courses to BCD but its tutors do not have to have an accredited training qualification. In addition its courses do not follow the national accredited programs and the content and style of courses varies significantly between JKL centres. 

There are a number of universities which offer nationally accredited courses within Country P. BCD does not consider these as competitors, as they typically attract students wishing to undertake degree courses. The average university pass rate for nationally accredited programs is currently higher than BCD's

Which of the following types of benchmarking would be most useful for BCD?

Strategy is usually described as having three different levels: namely corporate strategy, business strategy and functional strategy. Which of the following are corporate strategies? Select ALL that apply.

Management Accountants increasingly play a key role in strategic planning.

Which of the following statements is NOT a role for Management Accountants involved in the strategy development process?

Communication is a critical element of the Organizational change process. Communicating the change vision is a component of Kotter's eight steps to transforming Organizations.

Which of the following statements support Kotter's component 'Communicate the change vision'?

Select ALL that apply.

DDD has just issued a profit forecast in connection with a proposed take-over of a business.  The take-over is strongly opposed by the target company. DDD's Management Accountant played a large part in helping DDD's Finance Director prepare the profit forecast.  However, the Management Accountant believes that the profit forecast is overly optimistic and is based on some false assumptions.  As a result the Management Accountant thinks the profit forecast is misleading. Select THREE of the actions below which are consistent with CIMA's Code of Ethics.

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?

XYZ operates a national chain of restaurants.

Which THREE of the following are external environmental drivers for XYZ?

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 of the following would be a suitable performance measure of Internal Business Processes within Kaplan and Norton's 'Balanced Scorecard' model?

AAA has a new CEO who wants to introduce rational strategy into the organisation.

Which THREE of the following are aspects of the rational strategy model?

JJJ presently makes motorcycles for use by the armed forces in its home country. Defence spending cuts have forced JJJ to seek a new business direction. JJJ has decided to make trucks for sale to private businesses in its home country.

Use the Ansoff product/market matrix to identify the new strategic direction of JJJ.

PPP uses the Boston Consulting Group Matrix (BCG Matrix) to prioritise products for investment and divestment. PPP invests or divests according to the quadrant of the BCG Matrix that the product occupies.

Which TWO of the following quadrants might receive only as much investment as required to maintain PPP's relative market share?

LLL is a travel company which has experienced rapid organic growth. It has three divisions and each division is led by a Divisional Director. Each Divisional Director is responsible for their own divisions' investment in Information Technology (IT). However, as LLL has grown, so has its information requirements.

Recently, LLL appointed an IT Manager. She discovered that within LLL's divisions, there are very different standards for IT, resulting in different hardware and software used in the three divisions. Also, the divisions do not use common software packages which causes difficulties in transferring information within LLL. LLL does not have a central IT department. 

Which of the following activities would be the primary focus of an Information Systems (IS) Strategy  for LLL?

CIMA has conducted research into the implications of sustainability for business.  CIMA's report contained a number of key conclusions. Which of the following statements was NOT a conclusion in CIMA's report? 

XYZ is a local tourist attraction. XYZ has a website on which it advertises all of its forthcoming events. XYZ's customers can also use the website to book tickets for these events and can also contact XYZ by email. XYZ's website also uses a range of interactive technologies including geographical location and map facilities and links to external information sites such as the local tourism board and local hotel listings.

Which of the following best describes the range of interactive technologies used by XYZ within its website? 

BBB is a global manufacturer of organic fertilizers, used by farmers all over the world to improve resistance to disease and to increase crop yield. BBB uses data from past crop yield results, international weather prediction data and predictive models relating to population growth and movement statistics to identify and predict the fertilizers it will need to produce for its customers many years in advance.

Which of the following best describes the activities outlined above? 

A leading retail chain is undertaking environmental scanning as it is concerned that it is becoming uncompetitive and profits have started to fall. The Board of Directors is concerned that it will need to have a viable strategy to present to its shareholders at the next annual general meeting, in order to prevent shareholders' protests.

The company has been reluctant in the past to offer an Internet shopping service. It now believes, however, that by offering this service and introducing customer relationship marketing (CRM), this will produce a strategy that will help it to improve its competitiveness.

Which of the following statements apply to CRM? (Choose all that apply.)

A fresh-food packaging manufacturer has recently changed the design of its packaging in order to reduce the amount of non-recyclable material. Its immediate customer, a large fresh-food wholesaler, does not see the need for this re-design as it believes that it will adversely affect the storage of the fresh food. However, the final customer, a large supermaket chain, has expressed strong interest in the new packaging design, as the supermarket chain has strict Corporate Social Responsibility targets to achieve.

Which of the following statements most appropriately describes the situation outlined above, from the perspective of the fresh-food packaging manufacturer?

A is a private healthcare organization aiming to provide affordable and accessible high quality patient services. A is introducing Big Data, which has not yet been adopted by the competition. A's database will store a huge amount of information about its patients. Clear access to wide sources of accurate information will enable patients to make more informed choices. Patients will be able to compare not only the prices of drugs, treatments and physicians but also their relative effectiveness.

Which of the following concerns should A have about its use of Big Data?

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

TUV had an employee turnover rate of 25% among new recruits and was becoming short of skilled workers. The Board of TUV realized there was something dramatically wrong and called in consultants to assess the problem. The consultants recommended transformational change in that TUV should redesign the entire production system, change the placement of all equipment and the flow of work, redefine every job and give all workers new assignments.

Which type of change did the consultants recommend for TUV?

RST is a company specializing in the production of wood-based products. RST has decided to introduce a fully integrated Information System across all divisions in order to improve knowledge sharing throughout the business and enhance customer relationship management.

RST is expecting resistance to the integrated Information System from it's staff who are key to the business and would be difficult to replace. Staff have a good understanding of why the new system and knowledge sharing is needed and how the system will work but many staff are not happy about the potential changes to their working conditions.

Which of the following change leadership styles, as outlined by Kotter and Schlesinger, would be most appropriate for RST to adopt?

A has a portfolio of business units. One of A's units has a total market share of 25% and its largest competitor has a market share of 20%. In the last year the overall market of this business unit has declined by 2%, although its revenues have increased by 12%. following a successful marketing campaign.

According to the BCG matrix. A's business unit would be classified as which of the following?