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CIMA E3 Exam
E3 Strategic Management (Page 5 )

Updated On: 1-Feb-2026
Page 5 of 37
PDF with 278 Questions

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?

  1. Suitable and Acceptable
  2. Suitable and Feasible
  3. Acceptable and Feasible
  4. Suitable, Acceptable and Feasible

Answer(s): D



DRAG DROP (Drag and Drop is not supported)

Select the ethical principle which is most likely to be challenged in each of the following situations.

  1. See Explanation section for answer.

Answer(s): A

Explanation:



DRAG DROP (Drag and Drop is not supported)
Porter's Generic Strategies are often applied within anOrganization's value chain, in order to organise the value-adding activities to support the chosen strategy.

Place the Generic Strategy which best defines the strategic approach being taken against each of the activities listed below.

  1. See Explanation section for answer.

Answer(s): A

Explanation:



An insurer, JJJ, uses its Internet capabilities to promote and sell car and home insurance products. Although JJJ is supported by an 'in-house' call centre located in its home country, it has decided to outsource this activity to an overseas call centre.

There are a number of benefits to the company by undertaking this strategy, including that it can charge more competitive premiums to its customers and also increase its profits.
However this change will mean that 75 call centre staff in the home country will be made redundant.

You have been appointed as the Change Leader and have been asked to prepare a report that includes details on how this change can be communicated.

Which THREE of the following statements are valid regarding JJJ's proposed changes and the related staff communications?

  1. When undertaking change, communication is of great importance.
  2. The Change Leader should keep staff informed but should only communicate information when all the detail has been finalised.
  3. It is important that the Change Leader selects a communication channel which is appropriate to the message being delivered and its target audience.
  4. Momentum for change can be created by putting simple but highly visible improvements in place.
  5. A disadvantage of adaptive change is that it increases the level of resistance that a company can encounter when trying to implement change.

Answer(s): A,C,D



DRAG DROP (Drag and Drop is not supported)

Select the MOST appropriate leadership style to manage each change situation outlined below.

  1. See Explanation section for answer.

Answer(s): A

Explanation:



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