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CIMA E3 Exam
E3 Strategic Management (Page 4 )

Updated On: 1-Feb-2026
Page 4 of 37
PDF with 278 Questions

FFF is considering developing a new website that will allow it to advertise and sell its high quality jewellery products online. The Board of FFF has identified that the cost of developing and managing a website would be relatively low. It is predicted that FFF will sell only a small percentage of its products through the website, as most customers like the personal experience of shopping in store.

However, research undertaken by the Marketing Director indicates that the website could be used very successfully by FFF for online marketing and customer communication. Therefore, theMarketing Director has suggested that FFF should develop an IT/ IS strategy to ensure a strategic focus for its website development. However, most of FFF's Board members, who are the main shareholders of the business, believe that developing an IT/IS strategy is unnecessary in order to develop and manage its website.

Which of the following arguments could be made by the Marketing Director to the Board of
FFF to persuade it that an IT/ IS strategy would be appropriate in relation to the current website development?

  1. IT/ IS is expected by FFF's key stakeholders and should therefore have a strategic focus.
  2. IT/ IS forms the basis of FFF's competitive advantage and therefore requires a strategic focus.
  3. IT/ IS is fast moving and FFF can take advantage of new technologies as they become available, if managed strategically.
  4. IT/ IS is very expensive and without a strategic focus there is a risk of costly mistakes.

Answer(s): C



XYZ operates a national chain of restaurants.

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

  1. Appointment of a new Marketing Director
  2. Recession in XYZ's country
  3. Reduced personal income of its customers due to increased personal taxation
  4. A direct competitor to XYZ closes down
  5. Launch of a new improved menu by XYZ

Answer(s): B,C,D



DRAG DROP (Drag and Drop is not supported)
Company XX and Company YY are the only two providers of electricity to Country M. The demand for electricity is price inelastic which means that buyers regard it as essential and therefore demand for electricity does not change significantly if the average price of electricty changes. However customers will switch between suppliers within a year to get cheaper electricity. Using Game Theory place the long-run revenue impact on each firm of each of the following pricing decisions.

  1. See Explanation section for answer.

Answer(s): A

Explanation:



PPP is a company that designs and markets attractive handsets, tablets, and laptop PCs globally. Its brand is one of the top ten global brands. PPP uses external companies to manufacture its products.
The recently appointed CEO of PPP presented the company's strategy to a meeting of investors and journalists.

The CEO referred to public concerns about its past ways of doing business. He stated that PPP was actively seeking to address concerns about exploitation of workers in the factories of its suppliers. He said that PPP is also establishing a system to recycle or refurbish its products to avoid hazardous materials leaking into the environment and to give recycled products free of charge to people in poorer countries who cannot afford to buy them.

One investor asked the CEO to confirm whether this strategy would improve the profits of PPP in the present financial year. The CEO replied that it would not but that the strategy was essential to protect the future of the PPP brand. The investor was unhappy with this response from the CEO of PPP.

Which of the following statements reflects BOTH the CEO's and investor's stances on Corporate Social Responsibility (CSR) expressed at the meeting?

  1. The CEO is taking a long-term shareholder interest stance. The investor is taking a short-term shareholder interest stance.
  2. The CEO is taking a multiple stakeholder stance. The investor is taking a longer-term shareholder interest stance.
  3. The CEO is taking multiple stakeholder obligation stance. The investor is taking a multiple stakeholder obligation stance.
  4. The CEO is taking a shaper of society stance. The investor is taking a longer-term shareholder interest stance.

Answer(s): A



Communication is a critical element of theOrganizational change process. Communicating the change vision is a component of Kotter's eight steps to transformingOrganizations.

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

Select ALL that apply.

  1. Ensure the change message and vision are memorable and repeatable.
  2. One-way communication is more powerful than two-way communication.
  3. Storytelling and symbolic actions are unnecessary.
  4. Unaddressed inconsistencies undermine the credibility of strategic communications.
  5. Face-to-face communications improve clarity of message.

Answer(s): A,D,E



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