IIA IIA Certifications IIA-CIA-PART3 Questions & Answers

• Question 621:

  Business strategies may be characterized by their effects on operations. The distinction between a compact car and a luxury car reflects which operational strategy?

  A. Cost.

  B. Flexibility.

  C. Service.

  D. Quality.

  Correct Answer: D

  A quality strategy involves competition based on product quality or process quality. Product quality relates to design, for example, the difference between a luxury car and a subcompact car. Process quality concerns the degree of freedom from defects.

• Question 622:

  Which of the following best describes a cost synergy?

  A. Recycling of by-products.

  B. Selling one product strengthens sales of another product.

  C. Transferring knowledge to new uses.

  D. Acquiring new management skills.

  Correct Answer: A

  Cost synergy results in cost reduction. It manifests itself in many ways, for example, in recycling of byproducts or in the design, production, marketing, and sales of a line of products by the same enterprise.

• Question 623:

  Strategic management includes developing the organization's grand strategy. This strategy is based on:

  A. Existing strategic business units (SBUs).

  B. A SWOT analysis.

  C. Portfolio management of the organization's businesses.

  D. Strategic planning.

  Correct Answer: B

  Strategic management is a process that includes development of a grand strategy that describes how the organization's mission is to be achieved. This strategy is based on a situational analysis that considers organizational strengths and weaknesses (a capability profile) and their interactions with environmental opportunities and threats. Such an evaluation is also called a SWOT analysis. Strengths and weaknesses (the internal environment) are usually identified by considering the firm's capabilities and resources. What the firm does particularly well or has in greater abundance are known as core competencies. Opportunities and threats (the external environment) are identified by considering macroenvironment factors (economic, demographic, political, legal, social, cultural, and technical) and microenvironment factors (suppliers, customers, distributors, competitors, and other competitive factors in the industry).

• Question 624:

  Which one of the following is a social trend affecting the organization?

  A. Changes in labor markets.

  B. Tougher legislation to protect the environment.

  C. Rising inflation.

  D. Replacements for steel in cars and appliances.

  Correct Answer: A

  Social trends, such as changes in labor markets, reflect social, cultural, and demographic factors in the organization'smicroenvironmentthat may constitute opportunities or threats (identified in a SWOT analysis). The attributes of people (age, education, income, ethnicity, family status, etc.) and their beliefs, attitudes, and values shape and are shaped by social trends that in turn affect the organization. Thus, changes in the characteristics, sources, locations, and costs of labor resources supplied (a basic factor of production) have great effects on an organization's strategic position.

• Question 625:

  Which of the following is a market-oriented definition of a business versus a product- oriented definition of a business?

  A. Making air conditioners and furnaces.

  B. Supplying energy.

  C. Producing movies.

  D. Selling men's shirts and pants.

  Correct Answer: B

  Businesses should be defined in market terms, that is, in terms of needs and customer groups. Moreover, a distinction should be made between a target market definition and a strategic market definition. For example, a target market for a railroad might be freight hauling, but a strategic market might be transportation of any goods and people. Accordingly, stating that a business supplies energy is a market-oriented definition as opposed to the product-oriented definition. Moreover, it is also a strategic market definition.

• Question 626:

  Which of the following best describes a market synergy?

  A. Technology transfer from one product to another.

  B. Bundling of products distributed through the same channels.

  C. Production of multiple products at one facility.

  D. Use of complementary management skills to achieve entry into a new market.

  Correct Answer: B

  Market synergy arises when products or services have positive complementary effects. Shopping malls reflect this type of synergy. Also, bundling of products, distribution through the same distribution channels, and use of the same sales force are other examples of market synergies.

• Question 627:

  Which of the following is least likely to be an example of synergy?

  A. A shopping mall with several businesses providing different products and performing different services.

  B. A car dealership providing warranties on automobile parts to maximize customer value.

  C. A manufacturing company hiring a new manager with technological experience lacking in the company.

  D. Military Humvees being converted into sports utility vehicles for sale to civilians.

  Correct Answer: B

  Synergy occurs when the combination of formerly separate elements has a greater effect than the sum of their individual effects. However, a car dealership's provision of warranties reflects anoperational strategy designed to provide post-purchase services to gain a competitive advantage and maximize customer value. It does not reflect the complementary sharing of resources, technology, or competencies. In contrast, synergy arises from selling a line of carsthat share some components or abrand identification.

• Question 628:

  Which of the following types of work teams are most likely to be cross-functional?

  A. Command group.

  B. Virtual.

  C. Research-and-development.

  D. Informal.

  Correct Answer: C

  A cross-functional team is one that includes members of different departments who have different areas of expertise. A research-and-development team is usually a cross-functional team because many different skills are needed to identify and create a new product.

• Question 629:

  A problem with the effectiveness of teams is the concept known as:

  A. Brainstorming.

  B. Social loafing.

  C. Synergy.

  D. Role playing.

  Correct Answer: B

  Social loafing is the situation wherein a team member puts forth less effort in a group than he or she would individually. To avoid social loafing, individual efforts should be identifiable and subject to evaluation.

• Question 630:

  A team member who focuses on the overall perspective and reminds others of the vision, mission, or goal of the team informally assumes the role of a:

  A. Contributor.

  B. Collaborator.

  C. Communicator.

  D. Challenger.

  Correct Answer: C

  A communicator is a people-oriented member. S)he is process-driven and an effective listener. Thus, a communicator plays the role of a facilitator and a consensus builder.