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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 381:

  When firms compete in different geographical locations or have multiple product lines that do not necessarily overlap, the most effective way of responding to an aggressive move by a competitor without directly triggering destructive moves and countermoves is to

  A. Mislead the competitor into taking or not taking an action.
  B. Make a prior announcement of intended moves.
  C. Initiate a move in the market where the competitor is strong.
  D. Initiate direct aggressive moves
  C. Initiate a move in the market where the competitor is strong.

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  Initiating a move in the market where the competitor is strong is a cross- parry. A cross- parry is an effective way to signal displeasure and raise the threat of more serious retribution without directly triggering destructive moves and countermoves.

• Question 382:

  Rivalry among existing firms in an industry is more likely to be strong when:

  A. The industry is in the rapid growth stage.
  B. Investment intensity is low.
  C. A few firms are dominant.
  D. Capacity must be expanded in large increments.
  D. Capacity must be expanded in large increments.

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  The intensity of rivalry and the threat of entry may vary with the extent of capacity expansion dictated by the need to achieve economics of scale. If it must be made in large increments to achieve economics of scale, competition will be more intense. The need for large-scale expansion to achieve production efficiency may result in an excess of industry capacity over demand. However, if capacity may be expanded in small increments, industry capacity is less likely to be excessive, the supply-demand balance is less likely to be upset, and price cutting is less likely to be necessary.

• Question 383:

  The faulty email led to a communications error by the executive committee of the multinational firm. The error was in:

  A. Decoding of the message.
  B. Choice of transmission medium.
  C. Understanding of the message.
  D. Response to the message.
  C. Understanding of the message.

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  Because of faulty encoding, the message was open to two different interpretations. The committee chose the wrong one.

• Question 384:

  When negotiating with an analytical personality, the negotiator should:

  A. Present facts and precedents in an organized manner.
  B. Push the other party for quick closure of negotiations.
  C. Focus on creating a bond with the other party.
  D. Include unimportant items in the proposal for bargaining.
  A. Present facts and precedents in an organized manner.

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  An analytical person tends to be drawn to details and swayed by factual information.

• Question 385:

  The use of power in an organization may be defined as the ability to influence employees to do what they would not ordinarily do. The exercise of this power:

  A. Affects decisions, behavior, and situations.
  B. Tends to be accepted by employees only when it is based on legitimate power.
  C. Is most likely to be accepted by employees when a manager's source of power is informal.
  D. Requires the authority to manage.
  A. Affects decisions, behavior, and situations.

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  The exercise of power affects the decisions made by employees, for example, as the result of advice offered by someone with expert power. It also affects behavior, for example, as the result of a warning from someone with coercive power. Moreover, the exercise of power affects situations, for example, a change in the nature or type of resources used in operations effected by someone with any base of power.

• Question 386:

  The biggest advantage of oral communication overwritten communication is that oral communication

  A. Tends to be more accurate.
  B. Promotes feedback.
  C. Is less time-consuming.
  D. Does not provide a permanent record.
  B. Promotes feedback.

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  Oral communication promotes immediate feedback so that the sender knows that the message has been clearly received by the receiver.

• Question 387:

  What is a primary disadvantage of forcing another party to accept terms in a negotiation?

  A. Damage of the relationship between the negotiators.
  B. Lack of achievement of the negotiator's goals.
  C. Increased time involved in reaching an agreement.
  D. Reduction in internal support for the negotiator's tactics.
  A. Damage of the relationship between the negotiators.

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  In future negotiations, the "forced" opponent will be less likely to work with the negotiator to achieve mutual goals. Negotiations in which one or both parties feel they must "win" at the expense of the other party ultimately do not build a relationship of trust and cooperation.

• Question 388:

  Market-follower strategies are adopted by firms that do not wish to challenge the leader. The market-follower strategy adopted in such industries as fertilizers and chemicals is:

  A. Conscious parallelism.
  B. Product innovation.
  C. Multiple niching.
  D. Counterfeiting.
  A. Conscious parallelism.

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  Some industries are characterized by conscious parallelism. These industries (e.g., fertilizers and chemicals) tend to have high fixed costs and little product and image differentiation. Market followers tend to imitate the leader because competing for a greater market share provokes painful retaliation.

• Question 389:

  For a multinational firm, which of the following is a disadvantage of an ethnocentric staffing policy in which all key management positions are filled by parent-company nationals?

  A. An ethnocentric staffing policy significantly raises compensation, training, and staffing costs.
  B. An ethnocentric staffing policy produces resentment among the firm's employees in host countries.
  C. An ethnocentric staffing policy limits career mobility for parent-country nationals.
  D. An ethnocentric staffing policy isolates headquarters from foreign subsidiaries.
  B. An ethnocentric staffing policy produces resentment among the firm's employees in host countries.

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  An ethnocentric staffing policy has the advantage that expatriates may understand the objectives, policies, and procedures of the parent firm better than local employees do. However, ethnocentrism in hiring has the following disadvantages, among others:(1) Expatriate managers have difficulty in adapting to a new culture, language, and physical environment;

  (2)

  training and relocation costs may be high;

  (3)

  host-country governments prefer local control; (4) the morale and performance of host-country employees will suffer.

• Question 390:

  Of the major processes affecting the evolution of an industry, which one affects rivalry, entry, expansion, and supply?

  A. Long-run changes in the industry growth rate.
  B. Changes in input costs.
  C. Structural changes in suppliers' and customers' industries.
  D. Government policies.
  A. Long-run changes in the industry growth rate.

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  Long-run changes in the industry growth rate affect rivalry, entry, expansion, and supply. These changes occur because of changes in five external factors:demographic traits (such as consumer ages and income levels), trends in needs of buyers (caused by changes in regulation, tastes,lifestyles), relative positions of substitute and complementary products, sales to new customers (market penetration), and product innovation, an internal factor, alters the industry's position regarding the external factors.