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Financial CMA Exam
Certified Management Accountant (Page 9 )

Updated On: 1-Feb-2026
Page 9 of 270
PDF with 1336 Questions
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Which one of the following managements consideration is usually addressed first in strategic planning?

  1. Outsourcing.
  2. Overall objective of the firm.
  3. Organizational structure
  4. Recent annual budgets.

Answer(s): B

Explanation:

Strategic planning is the process of setting overall organizational objectives and drafting strategic plans. It is a process of long-term planning. Setting ultimate objectives for the firm is a necessary prelude to developing strategies for achieving those objectives. Plans and budgets are then needed to implement those strategies.



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Vasil, Inc. conducted a strategy self-assessment of factors contributing to market attractiveness and business strengths as follows:

The factor ratings range from 1 (the lowest) to 5 (the highest). Which one of the following strategies would be the most beneficial for Vasil?

  1. Build selectively on strengths.
  2. Upgrade product line.
  3. Focus on attractive segments.
  4. Avoid investments.

Answer(s): A

Explanation:

Vasil can quantify the results of its strategic self-assessment by weighting and summing each rating.



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A manufacturing company produces plastic utensils for a particular segment at the lowest possible cost. The company is pursuing a cost?

  1. Leadership strategy
  2. Focus strategy
  3. Differentiation strategy
  4. Containment strategy

Answer(s): B

Explanation:

A cost focus strategy aims at cost leadership in a particular segment, such as a regional market or a specialty product line. The rationale for a focus strategy is that the narrower market can be better served.



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Which basic force(s) drive (s) industry competition and the ultimate profit potential of the industry?

I). Threat of new entrants.
II). Bargaining power of suppliers.
III). Favorable access to raw materials and labor.
IV). Product differentiation

  1. I only
  2. I and II only
  3. III and IV only
  4. I, II, III, and IV

Answer(s): B

Explanation:

Threat of new entrants and bargaining power of suppliers are among the five basic forces that drive industry competition and the ultimate profit potential industry. This potential is measured in terms of long-term return on invested capital. The other three forces are rivalry among existing firms, threat substitutes and threat of buyers' bargaining power.



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Which of the following is a favorable condition for a firm competing in profitable, expanding industry?

  1. The firm does not have a strong customer base.
  2. A few suppliers who can restrict supply.
  3. Competitors find it difficult to acquire the firm's customers.
  4. The firm has high costs relative to other firms in the industry.

Answer(s): C

Explanation:

A firm that has successfully differentiated its products through developing a desirable image, better services, cost leadership, the features of the product, or other means is in a favorable competitive position Competitors find it difficult to acquire the firm's customers, for example, by price cutting. The reason is that the firm's products are perceived to have few substitutes, and brand loyalty is high. Furthermore, barriers to entry are favorable to the firm. These barriers deter competitors from entering the market. Existing firm can increase market share and emphasize cutting costs and increasing value?



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