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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 141:

  Strategic choices in an emerging industry are inherently subject to great uncertainty and risk with regard to competitors, industry structure, and competitive rules. Accordingly, a firm considering entry into an emerging industry:

  A. Has little need to be concerned with industry cooperation.
  B. Is least likely to be able to shape the industry structure at this stage.
  C. May enjoy such benefits of pioneering as experience advantages and early commitment to suppliers.
  D. Must be prepared for responding vigorously to competitors' moves.
  C. May enjoy such benefits of pioneering as experience advantages and early commitment to suppliers.

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  Timing of entry is a critical choice. Pioneering firms face high risk but low barriers and may earn high returns. The following are factors favoring early entry:pioneering improves the firm's reputation, the learning curve (experience) advantage is important and will persist, customer loyalty will be high, and cost advantages (through early commitment to suppliers or distributors) can be secured.

• Question 142:

  Which one of the following is not an example of formal internal communication?

  A. Input for the yearly budget provided by the Purchasing Department to the director of budgeting.
  B. Environmental impact statements.
  C. Expense account reports.
  D. Safety bulletins.
  B. Environmental impact statements.

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  A formal communication is conducted through the formal structure of the organization. Informal communication operates outside of officially established channels. An internal communication is one that is both generated and received within the organization. An environmental impact statement is generated within the organization, but the recipient a governmental body) is outside the organization.

• Question 143:

  Patents are granted to encourage firms to invest in the research and development of new products. Patents are an example of

  A. Vertical integration.
  B. Market concentration.
  C. Entry barriers.
  D. Collusion.
  C. Entry barriers.

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  Entry barriers exist in all market structures other than perfect competition. The fewer the firms in an industry, the greater the barriers tend to be. Entry barriers include the existence of substantial economies of scale (low unit costs can be achieved only by large producers). They also include barriers created by existing firms. For example, large advertising expenditures may be necessary to compete. Control of raw materials or technology is another barrier. Consequently, patents held by existing firms may serve as an entry barrier because they prevent potential competitors from using certain technology. Patents are rights granted by the federal government to inventors to allow them the exclusive use of their inventions for a specific.

• Question 144:

  A firm in a declining industry ordinarily adopts one of four strategies. A firm that follows a:

  A. Quick divestment strategy should have divested during the maturity phase.
  B. Leadership strategy may assume that success will enable the firm to subsequently pursue a harvest strategy.
  C. Harvest strategy seeks a pocket of stable demand.
  D. Niche strategy is engaged in a gradual liquidation.
  B. Leadership strategy may assume that success will enable the firm to subsequently pursue a harvest strategy.

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  A leadership strategy is pursued by a firm that believes it can achieve market share gains to become the dominant firm. An assumption is that additional investment can be recovered. A second assumption is that success will put the firm in a better position to hold its ground or subsequently to follow a harvest strategy. This strategy may entail aggressive pricing, marketing, or other investments that raise the stakes for competitors; reducing competitors' exit barriers by acquisitions of their capacity or products, assuming their contracts, and producing spare parts and generic versions of goods for them; demonstrations of strength and resolve to remain in the industry; and publicizing accurate data about the reality of future decline so as to dispel competitors' uncertainty.

• Question 145:

  A manufacturing company produces plastic utensils for a particular segment at the lowest possible cost. The company is pursuing a cost:

  A. Leadership strategy.
  B. Focus strategy.
  C. Differentiation strategy.
  D. Containment strategy.
  B. Focus strategy.

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  A cost focus strategy aims at cost leadership in a particular segment, such as a regional market or a specialty product line. The rationale for a focus strategy is that the narrower market can be better served.

• Question 146:

  Which of the following indicates a high performance team?

  A. Pride in the team leader.
  B. Quick agreement on the first proposed solution for problems facing the team.
  C. Care in risk-taking.
  D. Commitment to personal growth of team members.
  D. Commitment to personal growth of team members.

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  Team effectiveness is reflected in achievement of objectives, innovation, adaptability, commitment, and favorable evaluations by senior management. According to Hans Thamhain, team effectiveness is determined by three sets of interdependent factors. Team effectiveness requires that all factors need to be addressed continually. A high- performance team is committed to the personal growth of its team members.

• Question 147:

  A firm considering entry into an emerging industry must be aware of many strategic factors. Thus, the firm must anticipate that:

  A. Early mobility barriers are likely to persist.
  B. Early commitment to suppliers is a strategic trap.
  C. The high cost of opening the market favor early entry.
  D. The nature of entrants may change.
  D. The nature of entrants may change.

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  The nature of entrants may change to include larger firms attracted by the proven and less risky industry. Firms must predict when such entry is likely given existing and probable future barriers and the costs of surmounting them. Firms also need to predict how new entrants will compete, e.g., on the basis of marketing power or economies of scale. Furthermore, new entrants may emerge through vertical integration.

• Question 148:

  The most likely generic benefit of vertical integration is:

  A. Lowering entry barriers.
  B. Increasing demand.
  C. Avoiding market transactions.
  D. Lowering mobility barriers.
  C. Avoiding market transactions.

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  Economies of vertical integration result from avoiding some market transactions. Transaction costs of dealing with outside parties are greater than those of dealing with inside parties.

• Question 149:

  Which of the following is an example of a badly encoded message?

  A. Inattention or disinterest in the message.
  B. Inconsistency between verbal and nonverbal messages.
  C. Gesturing to someone who cannot see the gesture.
  D. Sender's dislike of receiver.
  B. Inconsistency between verbal and nonverbal messages.

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  If body language or tone of voice send a message different from the spoken words, the receiver will not be clear about the meaning of the message.

• Question 150:

  The manager of customer service checking at the bank is most likely to encounter conflicts) because of:

  A. The department's reliance on the savings manager and the money market manager.
  B. The manager of customer service checking providing services for customers who do not have checking accounts.
  C. The requirement that the manager of customer service checking must report directly to both the president and the vice president for customer accounts.
  D. A potential disagreement with the director of personnel about a subordinate's performance appraisal.
  D. A potential disagreement with the director of personnel about a subordinate's performance appraisal.

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  The director of personnel DP) must coordinate all employee evaluations. Although the manager of checking services is in a line position that is not under the DP, s)he works with the DP when hiring, dismissing, transferring, or evaluating employees.