Free CIMA E2 Managing Performance Practice Questions

Sample Practice Questions

Try these 10 sample questions from the CIMA E2 Managing Performance practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A device manufacturer and independent software developers cooperate on compatible applications while competing for customers. What feature makes their arrangement a business ecosystem?

   1. A.A single firm owns all stages of production.
   2. B.Interdependent participants both cooperate and compete.Correct answer: B
   3. C.Suppliers are replaced by a wholly internal workforce.
   4. D.Transactions are confined to one traditional industry.

   Explanation: Kaplan states, "through both competition and cooperation". Competition between participants can coexist with cooperation; common ownership, an internal-only workforce and a single-industry boundary are not defining requirements.

   Reference: Kaplan CIMA E2 Managing Performance Study Text — Chapter 1, section 4, p.11

2. 2A manager agrees specific rewards in exchange for employees achieving agreed performance. Which leadership approach is most directly illustrated?

   1. A.Transformational leadership.
   2. B.Transactional leadership.Correct answer: B
   3. C.Laissez-faire leadership.
   4. D.Trait-based leadership.

   Explanation: The source explains, "efforts made by followers to achieve organisational aims are exchanged for specific rewards". The exchange of effort for agreed reward is transactional. Transformational leadership emphasises development and inspiration; laissez-faire is hands-off, while trait approaches focus on leader characteristics.

   Reference: CMI: Understanding Management and Leadership Styles — Transactional leadership

3. 3The only feasible way to bring a project's completion forward by two weeks is to purchase £8,000 of additional specialist capacity. Scope and quality standards will stay unchanged. Which trade-off is being evaluated?

   1. A.Lower quality in exchange for lower cost.
   2. B.Greater scope in exchange for shorter time.
   3. C.Shorter time in exchange for higher cost.Correct answer: C
   4. D.Higher quality in exchange for longer time.

   Explanation: APM describes duration compression as "Often resulting in an increase in cost". Here two weeks of time are saved for £8,000 extra cost, with scope and quality held constant. The alternatives introduce quality or scope changes absent from the stated plan.

   Reference: APM Project Management Glossary — Duration compression

4. 4How does value creation in a business ecosystem typically differ from value creation in a traditional market?

   1. A.It follows a strictly sequential transfer between firms.
   2. B.It removes the need for complementary capabilities.
   3. C.It relies on networked, mutually beneficial relationships.Correct answer: C
   4. D.It requires each participant to offer the same product.

   Explanation: Kaplan states, "value creation in ecosystems tends to be networked and mutual". The distinction concerns the pattern of value creation. A linear chain, absence of complementarity or identical offerings does not describe networked mutual value.

   Reference: Kaplan CIMA E2 Managing Performance Study Text — Chapter 1, section 5.1, p.15

5. 5A leader invites employees to question established assumptions and develop innovative solutions. Which transformational leadership factor is being demonstrated?

   1. A.Contingent reward.
   2. B.Management by exception.
   3. C.Intellectual stimulation.Correct answer: C
   4. D.Individualised consideration.

   Explanation: The source explains, "encourages followers to be creative, innovative and to challenge their own beliefs". The distinguishing behaviour is challenging assumptions. Reward exchange, corrective intervention and personalised support identify different factors.

   Reference: CMI: Understanding Management and Leadership Styles — Transformational leadership, Bass and Avolio factor 3

6. 6A project milestone must be completed by 30 June. Which measure directly assesses achievement of this time objective?

   1. A.Actual completion date compared with 30 JuneCorrect answer: A
   2. B.Total wages compared with the approved budget
   3. C.Test results compared with specified error tolerances
   4. D.Number of staff allocated compared with the staffing plan

   Explanation: The source states: "usually include technical, time, cost and quality objectives". Comparing completion with the specified deadline assesses time. The other comparisons assess cost, quality or resources.

   Reference: APM Project Management Glossary — Project objectives

7. 7A firm joins several business ecosystems. What should it expect about its role across those ecosystems?

   1. A.Its role must be identical in each ecosystem.
   2. B.Its first role becomes permanent after entry.
   3. C.Its membership prevents roles in other networks.
   4. D.Its role can differ between ecosystems and evolve.Correct answer: D

   Explanation: Kaplan states, "Play different roles in different ecosystems". An ecosystem role is context dependent; membership does not imply exclusivity or a permanent, uniform role.

   Reference: Kaplan CIMA E2 Managing Performance Study Text — Chapter 1, section 4.1, p.12

8. 8Under the situational leadership approach described by Hersey and Blanchard, what principally informs the level of direction and support a leader provides?

   1. A.The style the manager personally prefers using with every follower.
   2. B.The manager's formal rank within the organisation's hierarchy.
   3. C.The personality traits associated with the manager's original selection.
   4. D.Followers' willingness and ability to perform the task.Correct answer: D

   Explanation: The source identifies "willingness and ability of subordinates to carry out the tasks allocated". Situational leadership responds to task readiness. A fixed preference, rank or trait-based selection focuses on the leader rather than the followers' readiness.

   Reference: CMI: Understanding Management and Leadership Styles — Situational leadership

9. 9A project's approved cost objective is a maximum total cost of £200,000. Its final cost is £212,000. How far is the final cost above that objective?

   1. A.£200,000
   2. B.£212,000
   3. C.£412,000
   4. D.£12,000Correct answer: D

   Explanation: The source states: "Baseline The reference levels against which a project, programme or portfolio is monitored and controlled.". The approved objective supplies the baseline: £212,000 − £200,000 = £12,000 above it. £200,000 is the baseline, £212,000 the actual cost and £412,000 adds rather than compares them.

   Reference: APM Project Management Glossary — Project objectives; Baseline

10. 10Why can a successful business ecosystem raise entry barriers for a new competitor?

    1. A.The entrant may need to compete with the complementary network.Correct answer: A
    2. B.The entrant must acquire ownership of every existing participant.
    3. C.The entrant is legally barred from offering a substitute product.
    4. D.The entrant can succeed by duplicating the core product alone.

    Explanation: Kaplan states, "they also must compete against the entire system". The surrounding complementary businesses add a competitive hurdle beyond the core product. This is not a legal prohibition or an ownership requirement.

    Reference: Kaplan CIMA E2 Managing Performance Study Text — Chapter 1, section 4.2, p.13