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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 351:

  Industry structure and competition during the decline phase may result in intense and destructive competition. Which factor is most likely to contribute to this condition?

  A. Firms do not expect demand to rebound.
  B. The decline is rapid.
  C. Attractive substitutes are not available.
  D. Specialized assets used in the industry have low liquidation values.
  D. Specialized assets used in the industry have low liquidation values.

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  High exit barriers may restrain firms from leaving the industry even though their returns are poor. For example, specialized assets and inventory in a declining industry may have a low liquidation value. Few purchasers who wish to operate in the same industry may be available. Durable assets may have a carrying amount far greater than the liquidation value. Hence, liquidation may result in a loss that the firm may not wish to recognize. Furthermore, a low liquidation value means that the future discounted cash flows from remaining in the industry may exceed the opportunity cost of the capital invested in the declining industry. Thus, the returns from the proceeds of liquidation may be less than the returns from keeping those assets in the business.

• Question 352:

  What link in the communications chain is defective?

  A. The meaning of the message would be unclear to the buyer.
  B. The supervisor chose the wrong channel for the communication.
  C. The supervisor should not be the source of this type of communication.
  D. The supervisor did not account for the noise in the communication chain.
  B. The supervisor chose the wrong channel for the communication.

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  In the communications process, the medium is the channel through which the communication flows. The defect in this case was the channel chosen to inform the employee of his/her loss of job. The supervisor should have spoken directly with the employee. The supervisor ofpurchasing reviewed a memorandum prepared for a buyer in the department. The memo read, "Effective September 30, the corporation has determined that your functions will be absorbed into our parent company's small-unit purchasing function. This will reduce operating costs, improve communications, and facilitate production engineering changes. You will be provided with outplacement support." That should cover the situation," thought the supervisor. Its too bad that I am leaving on vacation before the buyer returns from vacation, but this memo will give the buyer the general idea."

• Question 353:

  Developing brand equity in a foreign market may be desirable but is subject to considerable risk. A global firm launching a new product in a new market most likely should

  A. Initially place most of the firm's emphasis on advertising geared to the local culture.
  B. Fully decentralize control of the marketing process.
  C. Avoid creating partnerships with local distribution channels to avoid dilution of the brand.
  D. Balance standardization and customization of the product.
  D. Balance standardization and customization of the product.

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  The firm should determine the ratio of standardization and customization. Products that can be sold virtually unchanged throughout several markets provide a greater profit opportunity for a global firm. However, cultural differences may require extensive customization to appeal to markets in different countries.

• Question 354:

  A firm expands into international markets to

  A. Be in foreign markets.
  B. Eliminate foreign competition
  C. Pursue new, higher-profit opportunities.
  D. Preclude piracy of the firm's products.
  C. Pursue new, higher-profit opportunities.

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  A firm may decide to go abroad for many reasons, for example, to respond to a competitive challenge in its home country by another global firm, to pursue opportunities yielding greater profits, to achieve economies of scale, to diversify, or to follow customers who need international service.

• Question 355:

  Forecasting early and late markets is necessary to shape product development and marketing efforts and to predict structural evolution of an industry. Which factor is the most significant in obtaining customer acceptance of a new industry's product or service?

  A. High switching costs.
  B. Required regulatory approval.
  C. High cost of obsolescence.
  D. A performance rather than a cost advantage.
  D. A performance rather than a cost advantage.

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  The nature of the benefit is the most significant factor. At one extreme, the benefit may consist of a performance advantage unattainable by other methods. At the other extreme, the benefit may be a pure cost advantage. Ordinarily, early markets purchase a product because it offers a performance advantage. Early markets tend to be suspicious of a product offering a cost advantage.

• Question 356:

  In a report, an internal auditor stated that communication in theauditedarea was poor with employees deciding in advance which information should be given to management so as topresent themselves in the best possible light. This is an example of:

  A. Filtering.
  B. Selective perception.
  C. Emotion.
  D. Language.
  A. Filtering.

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  Filtering of a message is the sender's manipulation of information so that it will be viewed more favorably by the receiver. Filtering is a typical problem in upward communication, e.g., from employee to manager.

• Question 357:

  A parent wishes to sell a subsidiary for US $1.6 billion. A buyer wishes to acquire the subsidiary for US $1.1 billion, with the best alternative to a negotiated agreement (BATNA) of US $1.4 billion. What is an acceptable BATNA for the seller in order for negotiation to be feasible?

  A. US $1.3 billion.
  B. US $1.5 billion.
  C. US $1.7 billion.
  D. US $1.75 billion.
  A. US $1.3 billion.

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  US $1.3 billion is an acceptable BATNA because the BATNA of the buyer is US $1.4 billion. Any amount over US $1.4 billion would cause negotiation to not be feasible.

• Question 358:

  Some behavioral models stress employee participation as a key to motivation. A limitation of the participative approach is:

  A. Workers are intrinsically lazy and must be driven.
  B. A number of dissatisfiers must be present in order for the approach to work.
  C. It is difficult to elicit the participation of all employees.
  D. Unresolvable conflicts arise when a mature, capable, creative person joins a structured, demanding, and limiting organization.
  C. It is difficult to elicit the participation of all employees.

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  For a participative management approach to succeed, the parties must have sufficient time, the issues must be relevant to employees' interests, employees must have the abilities training and communication skills) to participate, and the organizational culture should support participation. Accordingly, a limitation of the participative approach is that it is unlikely that all employees are willing to participate in decision making.

• Question 359:

  Which of the following characteristics do both informal and formal groups share?

  A. Both groups are structured similarly.
  B. Commitment to both groups depends on the group's attractiveness and cohesiveness.
  C. Membership in both groups is usually the same.
  D. Both groups exist within the community to perform a productive activity.
  B. Commitment to both groups depends on the group's attractiveness and cohesiveness.

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  The commitment to a group depends on the group's attractiveness and cohesiveness. Employees are more likely to join a group that has a favorable view from the outside and whose group members adhere to the group and resist outside pressure.

• Question 360:

  Which of the following is false with regard to quality circles and self-managed teams?

  A. Managerial acceptance by tradition-oriented managers.
  B. Self-managed teams are assigned by management, and quality circle teams are voluntary.
  C. Self-managed teams and quality circles often have better cohesion among members.
  D. Self-managed teams and quality circles are often able to help the organization operate more efficiently and effectively.
  A. Managerial acceptance by tradition-oriented managers.

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  Managerial acceptance is the primary obstacle to adoption of self-managed teams.Tradition orientedmanagers often perceive the loss of authority to a self-managed team as a threat to their status.