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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 261:

  A firm has become vertically integrated by acquiring a supplier. However, throughput of thesupplier is greater than the firm's needs. Accordingly, the firm most likely has acquired:

  A. A capability less than the efficient scale.
  B. An efficient capability that provides excess output.
  C. An efficient capability that creates excess demand.
  D. An efficient capability that does not achieve economies of scale.
  B. An efficient capability that provides excess output.

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  Upstream (backward) or downstream (forward) integration is the acquisition of a capability that otherwise would be performed by external parties that are suppliers or customers, respectively, of the firm. Whether integration should occur depends on the firm's volume of transactions with the external parties (throughput) and the magnitude of the capability required to achieve necessary economies of scale. If the integrating firm's need is for a capability less than the efficient scale, one of its options is to acquire a capability with a costinefficient scale. The other option is to acquire an efficient capability that provides excess output (in the upstream case) or creates excess demand (from, for example, a distribution capability in the downstream case). This option will require the integrated firm to sell or buy in the open market. Thus, the second option carries the risk of having to deal with competitors.

• Question 262:

  Leadership styles differ depending upon the personality type of the individual leader. A risk averse leader will generally:

  A. Make decisions more slowly.
  B. Require less information than a risk taker.
  C. Maintain status differences between with others.
  D. Work well in participative efforts where joint responsibility is assumed by several people.
  A. Make decisions more slowly.

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  A risk averse leader will avoid risky situations, make decisions more slowly, and seek more information than a person who is described as a risk taker.

• Question 263:

  Which factor is most likely to limit expansion of a firm's productive capacity?

  A. Senior managers have production backgrounds.
  B. The firm operates in one industry.
  C. Current technology will soon be obsolete.
  D. Demand uncertainty is low.
  C. Current technology will soon be obsolete.

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  A firm's behavior may send signals to competitors that building is unwise. For example, it may announce an expansion project or indicate in some way that forecasts of demand are unfavorable or that current technology will soon be obsolete.

• Question 264:

  Ina product's life cycle, the first symptom of the decline stage is a decline in the

  A. Firm's inventory levels.
  B. Product's sales.
  C. Product's production cost.
  D. Product's prices.
  B. Product's sales.

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  The sales of most product types and brands eventually decrease permanently. This decline may be slow or rapid. This first symptom of the decline stage of a product's life cycle triggers such other effects as price cutting, narrowing of the product line, and reduction in promotion budgets.

• Question 265:

  With the shift in some countries' economies toward service industries, a new form of organization has developed. This organization structure is referred to as the professional bureaucracy. While this structure resembles the machine bureaucracy which relies on standardized work processes) in several respects, it is different in one key aspect. This significant difference is that in a professional bureaucracy:

  A. Senior management has had to give up a substantial amount of control.
  B. Tasks are accomplished with a high degree of efficiency.
  C. There is strict adherence to rules.
  D. There is a tendency for subunit conflicts to develop.
  A. Senior management has had to give up a substantial amount of control.

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  A professional bureaucracy e.g., a university or library) is a complex and formal but decentralized organization in which highly trained specialists have great autonomy. The jobs performed by these professionals require years of education and training. By their nature, such jobs can be performed effectively only if the employees are afforded substantial autonomy.

• Question 266:

  Edward T. Hall has distinguished between high-context and low-context cultures. Which culture is high-context?

  A. United States.
  B. Canada.
  C. Germany.
  D. Japan.
  D. Japan.

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  Hall drew a distinction between high-context and low-context cultures. In high-context cultures (e.g., Japanese, Chinese, Arabic, and Korean), much meaning is transmitted by nonverbal cues and situational circumstances. Thus, a person's

  status in a firm, rank in society, and reputation convey the primary message.

  Section 2:Sec Two (51 to 90)

  Details:

  Industry and Market Analysis

• Question 267:

  When determining the appropriate span of control, the most important consideration is:

  A. The set of policies and procedures currently in effect.
  B. The typical span of control used by other entities.
  C. The preference of the company's creditors.
  D. That all departments will be evaluated, whether or not they will be affected.
  A. The set of policies and procedures currently in effect.

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  The most important factors to consider are the employees' and manager's preferences and skills, the firm's culture, the tasks involved, physical location of the department, and established policies and procedures.

• Question 268:

  In regard to effective negotiation, a win-win attitude is characterized by:

  A. Seeking mutual benefit and satisfaction.
  B. Cooperative.
  C. It promotes support of, and commitment to, the agreement.
  D. All of the answers are correct.
  D. All of the answers are correct.

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  In regards to effective negotiation, a win-win attitude is characterized by seeking mutual benefit and satisfaction, being cooperative, and promoting support of, and commitment to, the agreement. In contrast to a win-win attitude, a win-lose attitude is competitive and is a zerosum game instead of a positive-sum game.

• Question 269:

  A firm in a fragmented industry must position itself by adopting a competitive strategy appropriate to the industry. 1hich of the following is most clearly a focus strategy?

  A. Specialization by product type.
  B. Backward integration.
  C. An emphasis on low overhead and low payroll.
  D. Development of formula facilities.
  A. Specialization by product type.

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  A focus strategy is directed at a buyer group, segment of the product line, or geographic area. Thus, the strategic target is narrow compared with an industry wide strategy designed to achieve cost leadership or product differentiation. Specialization by product type or segment is a focus strategy. This focus may enhance bargaining power with suppliers. It may also increase differentiation because of the perceived expertise and image. The downside is reduced growth opportunities.

• Question 270:

  The managerial factor that may lead to overbuilding in an industry is:

  A. Management's belief that the career consequences of overcapacity appear to be more serious than those of under capacity.
  B. Management's production orientation.
  C. Inflation of expectations by industry buzz.
  D. Uncertainty caused by changes in industry structure.
  B. Management's production orientation.

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  Management that is production-oriented may be more likely to overbuild than marketing-or finance- oriented management.