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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 181:

  Structural considerations affecting the threat of substitutes include all of the following except:

  A. Relative prices.
  B. Brand identity.
  C. Cost of switching to substitutes.
  D. Customers' inclination to use a substitute.
  B. Brand identity.

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  Substitutes are types of goods and services that serve the same purpose. All products that can replace a good or service should be considered substitutes. For example, bicycles and cars are substitutes for public transportation. Structural considerations determine the effect substitutes have on one another. However, because substitutes are types (not brands) of goods and services that have the same purposes, brand identity is not a structural consideration affecting the threat of substitutes.

• Question 182:

  According to Michael E Porter's generic strategies model, a firm that successfully adopts a differentiation strategy is most likely to:

  A. Tend to disregard cost control.
  B. Risk overlooking product changes.
  C. Closely supervise its labor force.
  D. Be able to pass supplier cost increases on to its customers.
  D. Be able to pass supplier cost increases on to its customers.

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  Differentiation is the generic strategy favored by firms that seek competitive advantage through providing a unique product or service and that have a broad competitive scope. A successful differentiation strategy creates a consumer perception that few, if any, substitutes are available. Thus, a firm that adopts this strategy may have the additional advantage of being able to pass supplier cost increases to consumers.

• Question 183:

  Job instructions, official memos, and procedures manuals are examples of which type of organizational communication?

  A. Upward.
  B. Downward.
  C. Lateral.
  D. Diagonal.
  B. Downward.

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  Downward communication from superior to subordinate) is vertical communication consisting of orders, instructions, notices, memos, bulletins, newsletters, handbooks, loudspeakers, and the chain of command. It also includes job instructions and procedures manuals.

• Question 184:

  Managerial attitudes toward global operations are viewed by researcher HowardPerl mutteras a key to understanding multinational firms. A geocentric attitude is indicated by

  A. An identification with national perspectives even though the firm is genuinely international.
  B. Control and evaluation methods that are locally determined.
  C. Decision making concentrated in the central administrative authority.
  D. Little communication among subsidiaries.
  A. An identification with national perspectives even though the firm is genuinely international.

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  A geocentric attitude is truly internationally oriented while absorbing the best that various cultures offer. It is a completely balanced approach with full collaboration between central administrators and subsidiaries, control and evaluation methods that harmonize local and overall firm standards, and frequent communication in all directions (i.e., between central administrators and subsidiaries and among subsidiaries). Moreover, talent, not nationality, determines personnel decisions throughout the firm.

• Question 185:

  A firm should state its primary competitive scopes when it:

  A. Defines its strategic business units (SBUs).
  B. Establishes strategic control points.
  C. Formulates its mission.
  D. Makes investment and divestment decisions.
  C. Formulates its mission.

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  At the highest level, a firm's strategic planning function involves formulating its mission (ultimate firm purposes and directions), determining its strategic business units (SBUs), allocating resources to SBUs, planning to start new businesses, and downsizing or divesting oldbusinesses. A mission statement should address reasonably limited objectives, define the firm's major policies and values, and state the firm's primary competitive scopes (e.g., industries, products and services, applications, core competencies, market segments, degree of vertical integration, and geographic markets).

• Question 186:

  Two internal auditors have been assigned projects of equal priority and the same due date. Unfortunately, support services are limited. The auditors have been directed to negotiate between themselves for the available services. This type of negotiation is called:

  A. Distributive.
  B. Integrative.
  C. Attitudinal structuring.
  D. Intraorganizational.
  A. Distributive.

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  Distributive bargaining occurs in zero-sum conditions; that is, what one side gains, the other loses. The parties are in fundamental opposition to each other, and their relationship tends to be short-term.

• Question 187:

  Which of the following factors is least typical of an industry that faces intense competitive rivalry?

  A. Price-cutting.
  B. Large advertising budgets.
  C. Frequent introduction of new products.
  D. A high threat of substitutes.
  D. A high threat of substitutes.

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  A high threat of substitutes reduces the attractiveness of an industry. It tends to increase the price elasticity of demand and therefore limits price increases and profit margins. If other factors are constant, fewer entrants result in less intense competition.

• Question 188:

  A firm that moves from not exporting on a regular basis to establishing plants in foreign countries has

  A. Globalized.
  B. Nationalized.
  C. Glocalized.
  D. Internationalized.
  D. Internationalized.

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  The internationalization process is of crucial interest to nations that wish to encourage local firms to grow and to operate globally. According to Swedish researchers, it involves the following steps:

  (1)

  Lack of regular exports;

  (2)

  export via independent agents with a few markets, with later expansion to more countries;

  (3)

  creation of sales subsidiaries in larger markets; (4) establishment of plants in foreign countries.

• Question 189:

  Which of the following is an arrangement that involves partial integration and implies the ability to fully support an efficient subunit?

  A. Quasi-integration.
  B. Tapered integration.
  C. Upstream integration.
  D. Contract integration.
  B. Tapered integration.

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  Tapered (partial) integration implies that the firm can fully support an efficient subunit but has additional needs to be met in the market. If the in-house subunit will not be efficient, that inefficiency must be weighed against the benefits of tapering. Tapering resultsin lower fixed costs than full integration. Furthermore, the strategy may allow the firm's subunit(s) to maintain constant production rates while external parties bear the risk of fluctuations. Another use of tapering is to protect against operational imbalances among the subunits. A risk of tapering is selling to, or buying from, competitors. Another is greater coordination cost. Advantages of tapering are avoidance of locked-in relationships, some access to external expertise, increased managerial incentives, offering a credible threat of full integration to suppliers or customers, and obtaining knowledge of the adjacent business and an emergency supply source.

• Question 190:

  A fragmented industry is most likely to:

  A. Have substantial economies of scale.
  B. Have low transportation costs.
  C. Be characterized by suppliers with little bargaining power.
  D. Approximate pure competition.
  D. Approximate pure competition.

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  According to Michael E. Porter, individual firms in a fragmented industry have insignificant market shares and little influence on industry outcomes. Examples are retailing, agriculture, and creative enterprises. Thus, the situation approximates what economists call pure competition. Moreover, the industry has many small- or medium-sized firms with no market leader, products may or may not be significantly differentiated, and the technology may or may not be sophisticated.