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CIMA E3 Sample Question Answers

Question # 1

HHH is a teachingOrganization. HHH has begun to employ virtual reality to train the customers on its courses in how to perform complex manual tasks such as repairing machineryWhich activity in Porter's Value Chain has been impacted by HHH's use of virtual reality? 

A. Operations
B. Service
C. Procurement
D. Human resources management

Question # 2

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

A. Learning curve effects depend on repetition of the same behaviour. LearningOrganizations seek to modify behaviour. 
B. Learning curve effects apply to the factory. LearningOrganizations are always service industries. 
C. Learning curve effects increase with time. LearningOrganizations cease to learn after a time. 
D. Learning curve effects always reduce costs. LearningOrganizations always increase costs

Question # 3

MM is a business which sells entertainment products. MM now wants to move to a positionwhere it uses e-business as a fundamental part of its business strategy.Which of the following benefits would result from MM's use of e-business?Select ALL thatapply

A. Cost reductions because of lower overheads and cheaper procurement.
B. Increased online revenues.
C. Better control information through monitoring website activity.
D. An increased use of tacit knowledge.
E. A reduction in labour turnover and higher morale.
F. Better control of information.

Question # 4

Which of the following is an example of a value adding activity within the outbound logistics aspect of anOrganization's value chain?

A. Refunds offered to customers if they are dissatisfied with a purchase.
B. Promotions and discounts offered to loyal customers.
C. Delivery of customers' purchases directly to their homes. 
D. Regular training provided to staff in customer care.  

Question # 5

CIMA has described the two roles of enterprise governance as 'preventing failure' and'ensuring success'. CIMA sees 'preventing failure' as being related to having proper riskmanagement and corporate governance procedures in place. CIMA sees 'ensuringsuccess' as being concerned with the practise of strategic management.Which THREE of the following responsibilities of senior management are essential to'ensuring success' for theOrganization?

A. Providing leadership and direction to theOrganization.  
B. Maintaining awareness and responsiveness to abrupt change in theOrganization's environment.  
C. Demonstrating competence in the execution of new initiatives.
D. Avoiding the dominance of the executive team by particular personalities.
E. Ensuring conformance with the codes of corporate governance.

Question # 6

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 toBCD but its tutors do not have to have an accredited training qualification. In addition itscourses do not follow the national accreditedprograms and the content and style of coursesvaries significantly between JKL centres.There are a number of universities which offer nationally accredited courses within CountryP. BCD does not consider these as competitors, as they typically attract students wishingto undertake degree courses. The average university pass rate for nationallyaccredited programs is currently higher than BCD'sWhich of the following types of benchmarking would be most useful for BCD?

A. Process
B. Internal
C. Competitor
D. Strategic

Question # 7

Which of the following statements would encourage an Organization to use Scenario Planning?Select ALL that apply. 

A. Uncertainty in the industry is high, relative to management's ability to predict or adjust to change.
B. Competitor's are increasingly using Scenario Planning as part of their strategy formulation process.
C. TheOrganizationhas not previously experienced any major surprises or expensive strategic mistakes.
D. TheOrganizationhas achieved all of its objectives and operates within a stable external environment.
E. TheOrganizationoften experiences 'group-think', leading to a narrow view of the future.

Question # 8

T is a management consultant. He was recently contracted by company XYZ to act as an external Change Agent in aprogramof change being undertaken. T's first task was to assist XYZ in clearly defining the outcomes of the changeprogramand ensure that these were achievable. T also set up a number of change teams and led several workshops and team building exercises. Many of XYZ's staff were resistant to the changeprogram. Therefore, T had to ensure that he created an appropriate vision for the change and was able to resolve any conflict which occurred during the changeprogram. Which THREE of the following are the key skills of a Change Agent demonstrated by T?

A. Goal Setting
B. Negotiation skills
C. Independence
D. Role Setting
E. Managing up

Question # 9

You are a Management Accountant working for anOrganizationthat includes commitments to 'sustainability' in its mission statementWhich THREE of the following are contributions that a Management Accountant can make to the achievement of this part of the Organization's mission statement?

A. Integrated reporting of the triple bottom line of Profits, People and Planet.
B. Measures ofOrganization's use of non-renewable resources and environmental emissions.
C. Project evaluations that include the externalities as well as the cash costs.
D. Ensuring theOrganizationadopts the lowest cost technologies and suppliers.
E. Providing financial information with all non-recurring expenditures and incomes removed.

Question # 10

YYY is a profit-seeking provider of television channels. It broadcasts to some 55 countriesusing satellite and cable technologies. It also commissions and produces about 30% oftheprograms it broadcasts, to give it a unique competitive advantage against otherbroadcasters.Web 2.0 provides new opportunities for YYY and it has developed a strong social mediacomponent 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 yourecommend to YYY?

A. Kaplan and Norton's Balanced Scorecard
B. Lynch and Cross's Performance Pyramid
C. Stern Stewart's Economic Value Added (EVA)
D. Rappaport's Shareholder Value Analysis (SVA)

Question # 11

HHH is a teaching Organization. HHH has begun to employ virtual reality to train the customerson its courses in how to perform complex manual tasks such as repairing machinery.Which activity in Porter's Value Chain has been impacted by HHH's use of virtual reality?

A. Operations
B. Service
C. Procurement
D. Human resources management

Question # 12

BBB is a publisher. As a consequence of BBB using the Internet to outsource its typesetting andstudio activities it has been able to move its few remaining staff into much smaller and lessexpensive office accommodation.Which activity in Porter's Value Chain has benefitted from BBB's use of information systems?

A. Infrastructure
B. HR management
C. Sales and marketing
D. Outbound logistics

Question # 13

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

A. Learning curve effects depend on repetition of the same behaviour. Learning Organizationsseek to modify behaviour.
B. Learning curve effects apply to the factory. Learning Organizations are always serviceindustries.
C. Learning curve effects increase with time. Learning Organizations cease to learn after a time.
D. Learning curve effects always reduce costs. Learning Organizations always increase costs.

Question # 14

PPP uses the Boston Consulting Group Matrix (BCG Matrix) to prioritise products forinvestment and divestment. PPP invests or divests according to the quadrant of the BCG Matrixthat the product occupies.Which TWO of the following quadrants might receive only as much investment as required tomaintain PPP's relative market share?

A. Stars
B. Question marks
C. Dogs
D. Cash cows

Question # 15

JJJ presently makes motorcycles for use by the armed forces in its home country. Defencespending cuts have forced JJJ to seek a new business direction. JJJ has decided to make trucksfor sale to private businesses in its home country.Use the Ansoff product/market matrix to identify the new strategic direction of JJJ.

A. Related diversification
B. Product development
C. Market development
D. Market penetration

Question # 16

Which of the following is a 'hard' factor according to McKinsey's '7-S' model?

A. Staff
B. Skills
C. Strategy
D. Success

Question # 17

McKinsey's '7-S' model distinguishes between 'hard' and 'soft' factors.Which TWO of the following statements are correct?

A. Hard factors tend to be intangible and hard to identify.
B. Soft factors tend to be intangible and hard to identify.
C. Hard factors tend to be formal and measurable.
D. Soft factors tend to be formal and measurable.
E. Soft factors focus on the future and hard factors focus on the present.

Question # 18

The future can be viewed as consisting of a large number of alternatives. Forecasting techniqueshave been designed to assist decision-making and planning.Which TWO of the following statements are correct regarding the use of trend analysis as aforecasting tool?

A. Suitable for mature and stable products / services / companies.
B. Suitable for young and dynamic products / services / companies.
C. Useful where the external environment is always stable.
D. Useful where the external environment is always changing.
E. Useful where comparatives are not available.

Question # 19

Which TWO of the following statements are NOT characteristics of a robust 'coaching climate'?

A. Personal growth, team development and Organizational learning are integrated.
B. Coaching is seen primarily as an opportunity to be proactive rather than reactive.
C. People are able to engage in destructive confrontation.
D. Time for reflection takes place only out of office hours.
E. People are recognised and rewarded for sharing knowledge.

Question # 20

You are the youngest member of the senior management team and have recently been invited tobecome a member of the company's Board.You have been sent an outline agenda ahead of your Board induction meeting with the CompanySecretary. The first item on the agenda is the role of the Board.Which of the following statements is NOT the role of the Board?

A. Establish the company's vision, mission and values.
B. Relinquish responsibility for implementation of strategy to management.
C. Confirm the adequacy and alignment to strategy of internal control and risk managementsystems.
D. Establish strategy with regard to the risk appetite of the Organization.

Question # 21

Corporate political activity can be seen as a proactive attempt by a company to influencegovernment decision-making. In particular, lobbying represents a direct but often private attemptby businesses to influence a government's decision-making.Which of the following is NOT a legitimate and private form of lobbying?

A. Monitoring
B. Advocacy
C. Application of pressure
D. Undisclosed party financing

Question # 22

Communication is a critical element of the Organizational change process. Communicating thechange vision is a component of Kotter's eight steps to transforming Organizations.Which of the following statements support Kotter's component 'Communicate the changevision'?Select ALL that apply.

A. Ensure the change message and vision are memorable and repeatable.
B. One-way communication is more powerful than two-way communication.
C. Storytelling and symbolic actions are unnecessary.
D. Unaddressed inconsistencies undermine the credibility of strategic communications.
E. Face-to-face communications improve clarity of message.  

Question # 23

QQQ is Country M's largest supermarket with 40% of the market share. In addition it has openedseveral stores around the world in the last 10 years. One of the reasons for QQQ's success isits loyalty card. The loyalty card is used to gather information about the spending patterns of itscustomers. Around two billion pieces of information each week are captured and stored in anenormous data warehouse that can be accessed by QQQ and other selected large retail partners.The information can be used to assess the success of new product launches as well as whichdemographics of customer are making the purchases. The system also allows QQQ to tailor itsspecial offers to particular segments of the market and to predict the buying behaviour of itscustomers, which assists QQQ in procurement planning.Which of the following best describes the activities outlined above for QQQ?

A. Customer relationship management
B. E-business
C. Market segmentation
D. Data mining

Question # 24

Which TWO of the following would be measures included within the 'Department and work centres' level of the Performance Pyramid?

A. Market share percentage
B. Percentage of on-time deliveries
C. Number of product returns per period
D. Customer satisfaction levels
E. Production output per period  

Question # 25

You have applied for a job with a large accountancy practice and have been requested to attendfor an interview. You have also been informed that you will be required to give a ten minutepresentation on Corporate Political Activity (CPA).Which are valid statements with respect to Corporate Political Activity?Select ALL that apply.

A. The CIMA Code of Ethics does not consider it appropriate for a company to offer bribes topoliticians to secure publicly-funded business.
B. CPA can be considered to be part of a company's strategy to generate and sustain profits.
C. When established laws and regulations affect a firm's competitive environment, the companywill not be able to use CPA to try to influence political decision-making.
D. It is acceptable for a company to make an election contribution for a particular candidate andthen to try to influence subsequent parliamentary voting.
E. Companies can establish Coalitions to respond to specific political issues, but these are alwaysformed on a temporary basis.

Question # 26

'Big data' refers to datasets whose size is beyond the ability of typical database software tools tocapture, store, manage and analyse.Which of the following statements is NOT a valid statement regarding 'big data'?

A. As technology advances over time, the size of datasets that qualify as 'big data' will also increase.
B. The definition of 'big data' can vary by sector, depending on the software tools and datasetsizes common to a particular industry.
C. Sufficient analytical and managerial talent is available to exploit the opportunities associatedwith 'big data'.
D. 'Big data' will require the right infrastructure, incentives and safeguards to address publicconcerns.

Question # 27

Data mining is an important part of an Organization's knowledge discovery process.Effective data mining provides insight and can help unlock previously hidden opportunities.Which of the following are disadvantages of Data Mining?Select ALL that apply.

A. Privacy issues
B. Security issues
C. Ethical issues
D. Financial crime issues
E. Manufacturing issues

Question # 28

Kanter identified seven 'power skills' that change agents need to overcome apathy or resistance to change. Which of the following are power skills?Select ALL that apply.

A. Ability to work independently.
B. Ability to collaborate effectively.
C. Ability to develop relationships based on trust.
D. Ability to keep within a budget.
E. Ability to work ethically and sustainably.
F. Ability to keep projects to a strict time-line.

Question # 29

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?

A. Strong ethical principles can add great value to a brand.
B. Reporting on sustainability needs to provide hard evidence of the positive impact on society.
C. Management Accountants have a responsibility to promote an ethics-based culture.
D. The ethical tone within a business must come from the bottom.

Question # 30

Lynch developed the performance pyramid to define the links between objectives and performance measures. Which THREE of the following statements apply to the performance pyramid?

A. The performance pyramid is designed to ensure that all activities support the Organization'svision.
B. The left-hand side of the pyramid contains measures which have an external focus.
C. The lowest level of the pyramid contains the day-to-day operational measures.
D. The business operating systems level includes the market-related Critical Success Factors.
E. The business unit level includes measures which relate to internal systems needed to meetcustomers' needs.
F. The right-hand side of the pyramid contains measures which are predominantly non-financial.

Question # 31

DD is a medium size company and has decided to appoint a data mining company to collateinformation from a wide variety of sources and analyse the data into more meaningfulinformation.The Board of DD believes that by using a data mining company to undertake this work, it willadd value to its business and help it to remain competitive.Which of the following statements does NOT apply to data mining?

A. Data mining involves looking for new patterns and relationships in the underlying data.
B. Data mining can guide decision-making and predict future behaviour.
C. Data mining uses statistical analysis tools and other intelligent techniques.
D. The goal of data mining is the extraction of data.

Question # 32

McKinsey saw culture as seven interconnected elements and described these in the '7S' model. Which of the following is NOT a 'hard' factor within the '7S' model?

A. The way the Organization is structured and who reports to who.
B. The way in which the Organization plans to gain a competitive advantage.
C. The daily activities and procedures followed by staff.
D. The core values of the Organization.

Question # 33

Kaplan and Norton developed a model called the Balanced Scorecard to assist in the formation and achievement of strategic policy. Within this model are four perspectives. Which of the following statements is NOT applicable to a Balanced Scorecard perspective?

A. To succeed financially, how should we appear to our shareholders?
B. To achieve our vision, how should we appear to our customers?
C. To achieve our vision, how will we sustain our ability to change and improve?
D. To achieve our vision, how should we appear to our stakeholders?

Question # 34

BBB has often encountered difficulties when it has introduced strategies which involve Organizational change. BBB is about to enter a period of much change and has decided to appoint one or more change agents to help to manage this. Select ALL of the statements that apply in respect of a change agent.

A. Sensitive to the impact of change on all stakeholders.
B. Tolerant of ambiguity and uncertainity.
C. Skilled communicator with colleagues and subordinates.
D. Skilled at successfully meeting budget targets.
E. Worked in three similar change environments.
F. Willingness to drive through difficult decisions.

Question # 35

Company LL is a well established, reputable company which specialises in providing insurancecall centre services to the insurance industry. It has recently won a large contract to provide itsservices to a multi-national insurer. LL's staff are highly trained in insurance matters andmany have worked for LL for many years.LL undertakes long-term resource planning activities and has identified that during the wintermonths, when there will be more customers ringing up to make insurance claims, it willpotentially need to employ more staff. The Board has decided that rather than recruit its ownstaff, 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 alongsidethe other call centre staff. However, they will work at a lower pay rate and will only be paidfor the actual hours they work.This change will lead to a shift in the working environment, the routine and the composition ofthe group.Which THREE statements apply in respect of this proposed change?

A. The proposed change will affect the group dynamics, which can be seen as being similar to a'force field' situation.
B. In times of change, LL can give sensitivity training to this group of workers who can then beused as a source of support during the change process.
C. A Facilitator, as the leader of change, will allow the group to talk about their issues andconcerns with this change in a formal and structured manner.
D. As the change process LL is proposing is an internal matter involving a group of its staff,there is no need to undertake a stakeholder analysis.
E. LL will need to identify the Adversaries in the group, because if they are influential they maypersuade other group members to resist the change.

Question # 36

The concept of Triple Bottom Line (TBL) reporting expands traditional accountancyreporting systems to consider social and environmental performance, rather than simply financialperformance.Which THREE of the following does the TBL concept suggest should be measured in order toencourage greater business social responsibility?

A. Productivity
B. Profit
C. People
D. Planet
E. Privacy

Question # 37

RRR is a large insurance company specialising in home and property insurance. It uses a highlysophisticated information system which it uses to process its insurance claims efficiently andeffectively. It also holds a vast database of customer information and records. RRR's staff arevery highly trained and considered to be the leading specialists in the industry.Which category of intellectual capital is NOT present in the description of RRR above?

A. Human capiltal
B. Innovation capital
C. Customer capital
D. Organizational capital

Question # 38

BCD is an independent training provider in Country P. It provides training to a wide range ofcorporate customers in business related subjects. All of its tutors must possess a nationallyaccredited training qualification before they are allowed to teach. Also, all of its courses follownationally accredited programs and are externally monitored. This is considered to be a criticalaspect of its business reputation.BCD has one major competitor, JKL, within Country P. JKL offers similar courses toBCD but its tutors do not have to have an accredited training qualification. In addition its coursesdo not follow the national accredited programs and the content and style of courses variessignificantly 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 toundertake degree courses. The average university pass rate for nationally accredited programsis currently higher than BCD'sWhich of the following types of benchmarking would be most useful for BCD?

A. Process
B. Internal
C. Competitor
D. Strategic

Question # 39

An IT project is currently being undertaken by VVV, a large university. The project is to designand install a secure information system network for all academic staff and administrative staff inthe 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 andthe administrative staff once it is implemented.Which of the following would be an appropriate performance measure for the key objective setby VVV's Executive Board?

A. Overall usage time of the system compared to plan.
B. Number of staff trained in the use of the new system.
C. Percentage of staff usage of the system split between academic staff usage and administrativestaff usage.
D. User satisfaction levels.

Question # 40

MM is a business which sells entertainment products. MM now wants to move to a positionwhere it uses e-business as a fundamental part of its business strategy.Which of the following benefits would result from MM's use of e-business? Select ALL thatapply.

A. Cost reductions because of lower overheads and cheaper procurement.
B. Increased online revenues.
C. Better control information through monitoring website activity.
D. An increased use of tacit knowledge.
E. A reduction in labour turnover and higher morale.
F. Better control of information.

Question # 41

XYZ is a local tourist attraction. XYZ has a website on which it advertises all of its forthcomingevents. XYZ's customers can also use the website to book tickets for these events and can alsocontact XYZ by email. XYZ's website also uses a range of interactive technologies includinggeographical location and map facilities and links to external information sites such as the localtourism board and local hotel listings.Which of the following best describes the range of interactive technologies used by XYZ withinits website?

A. Social media
B. Information Sharing
C. Mash-up
D. Competence syndication

Question # 42

MMM is a large national bank. MMM has developed a vision statement which states that it aimsto:• Provide superior returns to our shareholders• Offer customers the best financial products on the market• Continuously train and develop our staff• Continually improve our business processes by utilising the latest information technologyWhich of the following would be an appropriate performance measure within a BalancedScorecard for MMM?

A. Reduction in staff numbers to increase profit levels.
B. Undertake customer satisfaction surveys.
C. Number of training days per member of staff.
D. Ensure that all IT equipment used is not more than two years old.

Question # 43

In 1989 Earl developed a framework to analyse the linkages between information systems, information technology and information management. Which of the following is NOT a characteristic of Information Systems strategy?

A. Aligning strategy development with business needs and seeking strategic advantage.
B. Business-led and demand-orientated; developing new strategic choices.
C. Formed with key objectives of using the information resource and generating new businesses.
D. Organization-based, relationships-orientated and management focused.

Question # 44

The Boston Consulting Group developed a matrix to assist managers in identifying the cash flow requirements of different businesses. The matrix suggests a number of appropriate strategies. Select ALL the strategies that apply to the Boston Consulting Group's matrix.

A. Hold
B. Build
C. Divest
D. Defer
E. Re-appraise
F. Diversify

Question # 45

Porter suggests that competitive advantage arises from the implementation of a 'generic strategy'. Which THREE of the following are NOT generic strategies?

A. Cost leadership
B. Focus
C. Differentiation
D. Diversification
E. Market development
F. Market penetration

Question # 46

TTT is a software design company which has grown successfully over the last 8 years. It hasbeen highly innovative and often collaborates with a number of external partners to produce highquality, innovative software for a wide range of customers.TTT's owner, K, has been a driving force behind its success. He spends a great deal of timeanalysing what is happening in the marketplace and trying to predict what customers need fromTTT, through a network of industry contacts. He has a strong vision for TTT and communicatesthis, with conviction, to his staff in regular face to face meetings. He recognises and rewards hisstaff when new developments are undertaken and completed successfully and believes that ifstaff feel appreciated, then they will be more motivated to succeed.Which THREE of the following skills for a leader in a change adept Organization does Kdemonstrate?

A. Tuning into the environment
B. Building coalitions
C. Communicating a compelling aspiration
D. Learning to persevere
E. Making everyone a hero

Question # 47

As a recently qualified accountant, you have been given responsibility for delivering anambitious project to centralise and computerise the accounts function within a geographicallydispersed, medium-sized business. In addition, the reporting timetable requires the project to bedelivered within a very short timescale with limited resources. You have decided to put togethera team to deal with these proposed changes.Which THREE of the following statements regarding effective Teams and Change are correct?

A. Individuals must become more than they were when working alone and must develop newcommitments and behaviours.
B. Teams that cross departmental boundaries can develop new performance criteria.
C. Teams that cross departmental boundaries can destroy shared values.
D. Teams should continue after their purpose has been served.
E. Teams play minor roles in institutional change.
F. Teams enhance learning and address change directly through creating recommendations andnew ideas.

Question # 48

To lead change successfully, Kotter and Schlesinger recommends that an Organization shouldchange its strategy according to the situation. Effective change leadership therefore involvesdetermining the optimal speed of change.Which of the following statements would justify proceeding slowly with a change initiative?

A. Where resistance will be intense and extensive.
B. Where resistance will be low and more localised.
C. Where information and commitment from others is unnecessary.
D. Where you have more Organizational power than those who may resist the change.

Question # 49

Mission statements set out the purpose of an Organization to a range of stakeholders who havean interest in what the Organization does. As an employee, you have been asked to assess theeffectiveness of your Organization's mission statement.Which of the following would NOT help the effectiveness of a mission statement?

A. Mission statements should be specific enough to impact Organizational behaviour.
B. Mission statements should communicate the Organization's distinctive advantages.
C. Mission statements should be flexible, realistic and attainable.
D. Mission statements should be aspirational and capture the imagination of stakeholders.

Question # 50

In order to implement a knowledge management strategy, an Organization must acquire suitablehardware and software so that knowledge can be stored and communicated. Which of thefollowing would be appropriate systems to use in a knowledge management strategy?Select ALL that apply.

A. Local area network
B. Groupware
C. Intranet
D. Internet
E. Ledgers and journals
F. Social media

Question # 51

ZZZ is a retailing Organization that is suffering falling market share and falling profits.ZZZ has a new Chief Executive Officer (CEO) who is urgently setting up a strategicperformance evaluation system. This will involve identifying Critical Success Factors (CSFs)and then monitoring Key Performance Indicators (KPIs).Advise the CEO which of the following statements is suitable for the role that a Chartered GlobalManagement Accountant should undertake.

A. Identify CSFs, develop KPIs, and report on ZZZ's performance against them.
B. Help strategic management to clarify CSFs then develop KPIs, and report on ZZZ'sperformance against them.
C. Develop KPIs from a range of external data and report on ZZZ's performance against them.
D. Act as a change leader in developing the strategic performance evaluation system.

Question # 52

JJJ is a private company belonging to a famous former athlete. It operates gyms and fitness clubsacross its home country. Each gym or fitness club is treated as a profit centre and the manager ofeach centre is paid bonuses based on its financial performance.Three years ago it introduced multidimensional performance measures into its managementcontrol systems. These measure capacity utilisation, financial performance, competitiveness,innovation, and the flexibility of its centres to cope with changing demands.The managers of its centres have been leaving at a very high rate over the last two years. Theyhave claimed that the measures are too open to interpretation and when they think they areimproving the centre's performance they are told they are doing the wrong thing. They alsocomplain that the managers in the centres near big cities find it much easier to reach their targetsthan the managers of other centres.Using Fitzgerald and Moon's Building Block model, where does the problem lie?

A. Standards and Rewards
B. Dimensions and Rewards
C. Dimensions and Standards
D. Standards, Dimensions and Rewards

Question # 53

XYZ is a manufacturer of garden tools. It has defined 'Excellence of Manufacture' as a Critical Success Factor. Which THREE of the following would be appropriate to use as Key Performance Indicators in respect of this Critical Success Factor?.

A. % of raw materials input which is scrapped.
B. Tonnage of raw materials usage.
C. Raw materials identified as essential.
D. Number of finished products rejected at final inspection.
E. Average age of products.
F. Amount of money budgeted for production process improvements.

Question # 54

RRR is a state-funded hospital serving a major city. It is under political pressure to reduce thewaiting times of patients requiring surgical operations who need to stay at the hospital for severalnights. 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 followingproblems 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 conditionWhich THREE linkages between Primary Activities in the Value Chain of RRR need tobe improved to provide extra bed spaces at RRR?

A. Between outbound logistics and service.
B. Between inbound logistics and marketing and sales.
C. Between inbound logistics and operations.
D. Between inbound logistics and outbound logistics.
E. Between inbound logistics and technology development.

Question # 55

BCD is a manufacturer of electronic components. Based on research of its external environmentBCD has chosen 'Customer Satisfaction' as one of its Critical Success Factors. In order tooperationalise this Critical Success Factor, BCD's management must associate and select anumber of relevant Key Performance Indicators.Which THREE of the following Key Performance Indicators would be suitable to use in respectof Customer Satisfaction?

A. Number of products returned by customers.
B. The % of customers who recommend BCD's products.
C. Improvement in product quality.
D. Amount of money spent on advertising.
E. Number of new customer accounts opened in the period.
F. Number of employees leaving in the period.

Question # 56

The Financial Director (FD) of your company has heard it said that 80% of profits come from20% of customers. The FD has accused the sales team of wasting time on serving customers whoare not valuable to the business.The FD has instructed you to take a random sample of 100 customers and to calculate the totalcontribution the company earned from each customer in the past year. The FD intends to instructthe sales team to stop selling to the bottom 25% of these customers in order to improveprofitability.Which THREE of the following factors should the FD consider when he interprets your results?

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