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E3 Strategic Management Questions 97–104 (page: 14)

Updated On: 4-Aug-2026

Which THREE statements about scenario planning are correct?

  1. It tells management what will happen so they are able to plan for it.
  2. It tells management what needs to be done to make the Organization successful in the future.
  3. It encourages creative thinking by the participants.
  4. It alerts management to the possibility of fundamental change in the environment.
  5. It encourages management to communicate their personal knowledge of trends.

Answer(s): C,D,E



PPP is a state owned national railway operator. It has many divisions, each focusing on specific areas of the country.
PPP's mission statement is 'to provide a safe, punctual and reliable public transport service at lowest cost to its passengers and the government'.
Which THREE of the following divisional performance measures should PPP adopt?

  1. Return on investment (ROI)
  2. Level of carbon emissions
  3. Percentage of trains arriving within 2 minutes of scheduled time
  4. Cost per passenger mile
  5. Number of accidents or near misses each month

Answer(s): C,D,E



Organizations require resources to undertake a strategy and these can include physical, human, financial and intangible resources. However, alone they will not ensure Organizational success. For that, resources must be combined together to create competences.
The competences which form the basis of competitive advantage are things that an Organization is able to do and are very difficult for competitors to copy.
Which of the following describes this?

  1. Threshold competences
  2. Strategic competences
  3. Core competences
  4. Basic competences

Answer(s): C



SSS is a large department store. It operates a chain of stores throughout Country Z. It offers a wide range of products, from cosmetics through to home furnishings.
SSS's Value Chain is presented below. 



Which of the following generic strategies is being undertaken by SSS?

  1. Cost Leadership
  2. Differentiation
  3. Differentiation Focus
  4. Stuck in the middle

Answer(s): B



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?

  1. Parochial self interest
  2. Misunderstanding
  3. Low tolerance to change
  4. Different assessments of the situation

Answer(s): A



'Change-adept' Organizations are those that manage change successfully. Moss-Kanter identified skills required by Organizational leaders which are necessary to lead 'change-adept' Organizations.
Your Organization is undergoing significant change and the appointment of a new CEO is imminent. You have been asked to recommend the key skills for assessing the shortlist of CEO candidates against. 
Which of the following statements are suitable for use as the selection criteria for the new CEO, consistent with the ideas expressed by Moss-Kanter?
Select ALL that apply.

  1. Able to communicate a compelling aspiration.
  2. Able to take heroic action.
  3. Able to challenge the prevailing Organizational wisdom.
  4. Able to break up coalitions.
  5. Able to tune into the environment.

Answer(s): A,C,E



YYY is a profit-seeking provider of television channels. It broadcasts to some 55 countries using satellite and cable technologies. It also commissions and produces about 30% of the programs it broadcasts, to give it a unique competitive advantage against other broadcasters.
Web 2.0 provides new opportunities for YYY and it has developed a strong social media component to its programming schedules to increase audience engagement.
Keeping YYY's divisions working together is crucial to its success as a business.
Which of the following methods of divisional Performance Measurement would you recommend to YYY? 

  1. Kaplan and Norton's Balanced Scorecard
  2. Lynch and Cross's Performance Pyramid
  3. Stern Stewart's Economic Value Added (EVA)
  4. Rappaport's Shareholder Value Analysis (SVA)

Answer(s): A



The Financial Director (FD) of your company has heard it said that 80% of profits come from 20% of customers. The FD has accused the sales team of wasting time on serving customers who are not valuable to the business.  The FD has instructed you to take a random sample of 100 customers and to calculate the total contribution the company earned from each customer in the past year. The FD intends to instruct the sales team to stop selling to the bottom 25% of these customers in order to improve profitability.
Which THREE of the following factors should the FD consider when he interprets your results?

  1. It will ignore many customer attributable costs that differ widely from customer to customer.
  2. This would not consider the future potential of the customer.
  3. This doesn't take into account the value of the customer in referring new customers to us.
  4. This would not consider the total contribution from the combination of products which the customer buys.
  5. It is ethically wrong to stop supplying unprofitable customers.

Answer(s): B,C,D



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