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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 91:

  Which of the following is a characteristic of a mechanistic organization?

  A. Knowledge by employees tends to be task-specific.
  B. Self-control is preferred to hierarchical control.
  C. Superiors usually have an informational and advisory role.
  D. Communication is horizontal.
  A. Knowledge by employees tends to be task-specific.

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  A mechanistic organization designs tasks that are specifically designed and have little flexibility. Therefore, the mechanistic organization focuses on task-specific knowledge by its employees.

• Question 92:

  A strategic business unit (SBU) has a low relative market share (RMS) and a high market growth rate (MGR). According to the portfolio model for competitive analysis (thegrowth sharematrix) created by the Boston Consulting Group, the SBU is considered a

  A. Star.
  B. Question mark.
  C. Cash cow.
  D. Dog.
  B. Question mark.

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  Question marks (low RMS, high MGR) are weak competitors in high-growth markets. They need large amounts of cash not only to finance growth and keep pace with the market but also to increase RMS, but do poorly in cash generation. If RMS increases significantly, a question mark may become a star. If not, it becomes a dog.

• Question 93:

  Which of the following is a likely effect of a narrow span of control?

  A. The manager closely supervises employees.
  B. Each employee is given more responsibility.
  C. The organizational structure is flexible.
  D. The manager's control over employees is limited.
  A. The manager closely supervises employees.

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  The span of control is the number of subordinates for which a manager or supervisor is responsible. When the span of control is narrow, a few subordinates are tightly controlled. A narrow span of control is typical of tall organizational structures.

• Question 94:

  Which of the following conflict resolution techniques has the goal of maintaining harmonious relationships by placing another's needs and concerns first?

  A. Accommodation.
  B. Compromise.
  C. Collaboration.
  D. Avoidance.
  A. Accommodation.

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  The goal of accommodation is maintaining harmonious relationships by placing an emphasis on another's needs and concerns.

• Question 95:

  Under "groupthink,"

  A. There is a tendency to conform to the majority's will and to ignore relevant individual input that is at variance with group opinion.
  B. The group is not required to reach consensus.
  C. The extent of groupthink is proportional to the size of the group.
  D. There are too many alternatives to facilitate decision making.
  A. There is a tendency to conform to the majority's will and to ignore relevant individual input that is at variance with group opinion.

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  Groupthink is the tendency to conform to the majority's will when individual input is at variance with the group opinion. Groupthink is a cause of faulty decision making in a group. Groups may not consider all alternatives because they desire unanimity at the expense of quality decisions. Groupthink occurs when groups are highly cohesive and under considerable pressure to make a decision.

• Question 96:

  Which of the following is a source of global competitive advantage?

  A. Low fixed costs.
  B. Production economies of scale.
  C. Weak copyright protection.
  D. Intensive local service requirements.
  B. Production economies of scale.

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  Production economies of scale exist when a firm can produce and sell the output at which the average total cost of production is minimized. (The archetypal example is oil refining.) In other words, economies of scale in centralized production may yield a cost advantage achievable only when output exceeds the demand in one country, and exports are feasible.

• Question 97:

  The negotiator, when encountering unexpected resistance from another party, should first:

  A. Attempt to determine the reason behind the resistance.
  B. Stop the meeting and address the other party's concerns privately.
  C. Restate the negotiator's position regarding the issue.
  D. Research the other party to determine the party's views and requirements.
  A. Attempt to determine the reason behind the resistance.

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  The first step in overcoming unexpected resistance is to attempt to determine the reason behind the resistance. Without knowing the reason, the negotiator is unable to counter it effectively. For example, knowing whether the other party is concerned about a major issue or a detail will affect the negotiator's response.

• Question 98:

  What is the last step in Porter's framework for developing a competitive strategy in a fragmented industry?

  A. Create a full list of reasons for fragmentation.
  B. Select the best strategy for operating in a fragmented environment.
  C. Evaluate whether a new structure will yield acceptable returns and what position the firm should occupy.
  D. Determine the industry's structure.
  B. Select the best strategy for operating in a fragmented environment.

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  The framework's initial steps determine the causes of fragmentation, analyze whether the causes can be overcome, and determine the best strategy if fragmentation can be overcome. The last step is determining the best strategy if fragmentation cannot be overcome.

• Question 99:

  A firm is performing an analysis of a capacity expansion decision. The simplest element of the analysis is

  A. Choosing the expansion method.
  B. Determining the expansion plans of rival firms.
  C. Calculating the net present value.
  D. Estimating total long-term demand.
  C. Calculating the net present value.

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  The formal capital budgeting process entails predicting future cash flows related to the expansion project, discounting them at an appropriate interest rate, and determining whether the net present value (NPV) is positive. This process permits comparison with other uses of the firm's resources. The apparent simplicity of this process is deceptive because it depends upon, among many other things, which expansion method is chosen, developments in technology, and profitability. Profitability in turn depends on such uncertainties as total long-term demand and the expansion plans of rival firms. However, once the assumptions of the NPV model have been determined, the calculation is straightforward.

• Question 100:

  According to Bruce Henderson, competitive equilibrium is most likely to be stable when:

  A. One competitor has twice the market share of a second competitor.
  B. Competitors are almost identical.
  C. One major factor is the critical factor.
  D. The product is undifferentiated.
  A. One competitor has twice the market share of a second competitor.

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  Bruce Henderson has analyzed firms' reaction patterns when confronted with competitive attacks. A key to the analysis is competitive equilibrium. When one competitor hasapproximately twice the market share of a second competitor, equilibrium exists. The costs of gaining market share outweigh the benefits to either party.