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CMA JUNE, 2021 EXAMINATION STRATEGIC LEVEL
SUBJECT: E3. ENTERPRISE STRATEGY
Time Allocated: Three hours Total Marks: 100
Instructions to Candidates
There are 3 Sections (A, B & C) in this paper. You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly numbered with the sub-question number then ruled off, so that the markers know which sub-question you are answering.
Section No of questions in the Section
No of sub-questions in the Section
Marks allocation
A 01 08 20%
B 01 05 40%
C 02 02 40%
TURN OVER
Page 2 of 4 SECTION A – 20 MARKS
This section consists of 1 question and 8 sub-questions.
You are advised to spend no longer than 36 minutes on this section. Section will carry 20 marks and one sub-question will carry 2.5 marks each.
QUESTION 1
(a) Point out key attributes of Strategic Management.
(2.5 Marks) (b) How did you explain “Zero Sum” at the role of stakeholder management in the strategic
management process?
(2.5 Marks) (c) Describe your idea regarding competitive intelligence.
(2.5 Marks) (d) Briefly describe “Tangible Resources” of business organization.
(2.5 Marks) (e) Explain the terms “Intellectual Capital”.
(2.5 Marks) (f) What are the key factors for future competitive success?
(2.5 Marks) (g) Why the value chain of rival companies oftendiffers?
(2.5 Marks) (h) When a Best-Cost provider strategy is appealing?
(2.5 Marks) [Total Marks: (2.5 x 8) = 20]
END OF SECTION A SECTION B Starts on page 3
Page 3 of 4 SECTION B – 40 MARKS
This section consists of 1 question and 5 sub-questions.
You are advised to spend no longer than 14.4 minutes on each sub-question in this section.
Section will carry 40 marks and one sub-question will carry 8 marks each.
QUESTION 2
(a) One important component of industry and competitive analysis involves the industry’s competitive process to discover how strong each competitive force is.
Explain what competition is and draw a diagram of five forces model of competition.
[Marks: 8]
(b) Business environment is very competitive now. QQ Company’s management asked to keep eyes on “Rivals’ Next Moves”. Why it is so important and what factors you need to consider here?.
[Marks: 8]
(c) Customers are very concern regarding price and the price of the products of SS Ltd.
are comparatively higher than those of rivals.
The CEO of SS Ltd. has taken initiative of revamping the value chain to curb or eliminate unnecessary activities. How it may be achieved?
[Marks: 8]
(d) Five digital technologies that can help pharma function to the best of its abilities over the course of the COVID-19 pandemic.
Explain what are the five digital technologies that can help pharma weather the COVID-19 storm.
[Marks: 8]
(e) The Board of Directors of POM LTD are very annoyed studying the culture of the company. They felt that the present culture pushing back the company instead to move forward. Board termed it as “Unhealthy Cultures”.
Please describe:
(i) Politicized Culture;
(ii) Change-Resistant Cultures;
(iii) Insular, Inwardly Focused Cultures;
(iv) Unethical Greed-Driven Cultures.
[Marks: (4 X 2) = 8]
[Total Marks: (8 x 5) = 40]
END OF SECTION B SECTION C Starts on page 4
Page 4 of 4 SECTION C – 40 MARKS
This section consists of 2 questions.
You are advised to spend no longer than 36 minutes on each question in this section.
Section will carry 40 marks and allocation of marks for each sub-question is indicated next to the sub-question.
QUESTION 3
M/s. XYZ Ltd. is business organized as three divisions and Head Office. The divisions are based on market groupings, which are Retail, Wholesale and Government. The divisions do not trade with each other. The main method of control of the divisions has been the requirement to earn a return on investment (ROI) of 15% per annum. The definition of return and capital employed is provided by Head Office, as is the criterion rate of 15%. The recent experience of M/s. XYZ Ltd. is that the group, as a whole, has been able to earn 15% ROI but there have been wide variations between the results obtained by different divisions. This infringes upon another group policy that forbids cross-subsidization i.e., each and every division must earn the criterion ROI. M/s. XYZ Ltd., is now considering divestment strategies and this could include the closure of one or more of-its divisions. The Head Office is aware that the Boston Product Market Portfolio Matrix (BPMPM) is widely used within the divisions in the formulation and review of marketing strategies. As it is so widely known within the group and is generally regarded by the divisions as being useful, the Head Office is considering employing this approach to assist in the divestment decision.
Required:
(a) Evaluate the use by M/s. XYZ Ltd., of the ROI and its policy that forbids cross- subsidization.
(b) Describe the extent to which the BPMPM could be applied by M/s. XYZ Ltd.
[Marks: (10+10) = 20]
QUESTION 4
C Ltd, a quoted chemical manufacturing company, has until recently achieved a steady increase in profitability over a number of years. It faces stern competition and the directors are concerned about disquiet expressed by major shareholders regarding the performance over the last two years. During this period it has consistently increased dividends, but its share price has not grown at the same rate as it did previously.
K Ltd. a director competitor is similarly experiencing a reduction in profitability. Its shareholders are diverse, with the majority being financial institutions. K Ltd has been criticized for under-investment and has achieved no product development over the last 2 years. Following a concerned media campaign, K Ltd is facing prosecution for discharging untreated pollutants into a river.
C Ltd. is seriously considering making a bid to acquire K Ltd. The directors of C Ltd.
however, are divided as to whether K Ltd. should be closed down or permitted to continue production post-acquisition if a bid is made, in either situation significant staff redundancies would follow.
Required:
(a) State the strategic factors which C Ltd. need to consider before making a bid to acquire K Ltd.
(b) Discuss the social and ethical implications for the managers and staff of both C Ltd.
and K Ltd. if the acquisitions go ahead.
(c) Discuss the environment issues which could face the directors of C Ltd. if it proceeds with the acquisition of K Ltd.
[Marks: (8+6+6) = 20]
*END OF THE EXAM PAPER*