IIA IIA-CIA-PART4 Online Practice Questions and Exam Preparation

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 1:

  A firm may decide to enter a new business by creating a new entity. After undertaking a structural analysis, the internal entrant chooses an appropriate target industry. The most likely target is an industry in which the entrant:

  A. Will have to develop its own distribution network.
  B. Can raise mobility barriers after entry.
  C. Will not have to compete with a dominant firm that seeks to protect the industry.
  D. Calculates that the costs of retaliation to existing firms are less than the benefits.
  B. Can raise mobility barriers after entry.

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  A distinctive ability to influence industry structure is another basis for earning above- average profits. Thus, an ability to raise mobility barriers after the firm has entered the industry is a reason to target that industry. Moreover, a firm may be able to recognize that entering a fragmented industry will start a process of consolidation and increased entry barriers.

• Question 2:

  A firm buys new computer equipment from bankrupt companies and resells it in foreign markets at prices significantly below those charged by competitors. The firm is

  A. Engaged in dumping.
  B. Engaged in price discrimination.
  C. Operating in a gray market.
  D. Operating in a black market.
  C. Operating in a gray market.

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  In a gray market, products imported from one country to another are sold by persons trying to make a profit from the difference in retail prices between the two countries. In essence, the seller firm in this case was exploiting a price difference between markets.

• Question 3:

  A network organizational structure is one in which:

  A. An employee reports to two bosses.
  B. Authority and responsibility are concentrated at the top of the organization.
  C. Labor is specialized.
  D. Major business functions are subcontracted to third-party providers.
  D. Major business functions are subcontracted to third-party providers.

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  The subcontracting of major business functions to others is a feature of network structures.

• Question 4:

  Which of the following results is most likely to occur when public media are used to resolve disputes between employees and management?

  A. The company's image may be improved.
  B. Public opinion may pressure the parties to resolve the dispute.
  C. Communication between employees and management is improved.
  D. The need for support from a union is increased.
  B. Public opinion may pressure the parties to resolve the dispute.

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  When public media are used as tools for resolving employee-management disputes, communication is hindered because the issues are addressed to the public rather than discussed with the other party. Moreover, compromise becomes difficult because the stated conclusions are solidified by public opinion. However, the need for union support is reduced because public pressure may help to resolve the negotiations.

• Question 5:

  A corporation is performing research to determine the feasibility of entering the truck rental industry.The decision to enter the market is most likely to be deterred if:

  A. Buyer switching costs are high.
  B. Buyers view the product as differentiated.
  C. The market is dominated by a small consortium of buyers.
  D. Buyers enjoy large profit margins.
  C. The market is dominated by a small consortium of buyers.

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  When purchasing power is concentrated in a few buyers or when buyers are well organized, their bargaining power is greater. This effect is reinforced when sellers are in a capitalintensive industry, such as trucking.

• Question 6:

  A firm is most likely to leave a declining industry because

  A. The remaining pockets of demand include price-insensitive buyers.
  B. It is the only part of a vertically integrated business that is affected.
  C. Buyers have high switching costs.
  D. Mobility barriers are high.
  B. It is the only part of a vertically integrated business that is affected.

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  Vertical integration of a business may require exit of the entire chain when the reasons for decline affect all its parts. However, when only one part of the vertically integrated business is in a declining industry, integration is an argument for exit of the affected part. Divestiture prevents the weak link from harming the entire chain.

• Question 7:

  Which of the following is a reason for delegating?

  A. The manager wants to make more decisions.
  B. Subordinates lack initiative.
  C. The manager wants to remain the sole expert in the manager's field.
  D. Subordinates have too many responsibilities.
  B. Subordinates lack initiative.

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  Delegation is the assignment of a manager's authority and/or workload to the manager's subordinates. By increasing subordinates' responsibilities, the manager gives them more opportunity to exercise judgment and become more confident.

• Question 8:

  Which of the following motivation theories is based on Japanese management practices?

  A. Theory X.
  B. Theory Y.
  C. Theory Z.
  D. Herzberg's Two-Factor Theory.
  C. Theory Z.

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  Ouchi's Theory Z is based on the Japanese practice of providing long-term employment to workers. This creates job loyalty with a goal of achieving a long-range orientation among workers.

• Question 9:

  A claimed advantage of decentralizing is:

  A. Concentration of authority.
  B. Manager development.
  C. Elimination of duplication of effort.
  D. Departmentalization.
  B. Manager development.

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  When an organization changes from a centralized to a decentralized structure, top management is delegating more authority to middle and lower levels. Thus, managers at these lower levels are usually hired and developed more rigorously than under the centralized structure.

• Question 10:

  When evaluating communication, the accountant should be aware that nonverbal communication

  A. Is independent of a person's cultural background.
  B. Is often imprecise.
  C. Always conveys a more truthful response.
  D. Always conveys less information than verbal communication.
  B. Is often imprecise.

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  Nonverbal communication body language) consists of facial expressions, vocal intonations, posture, gestures, and appearance, and physical distance. Thus, by its nature, nonverbal communication is much less precise than verbal communication.