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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 521:

  Which of the following conflict triggers is best resolved by reorganization?

  A. Scarcity of people, funds, or other resources.
  B. Badly defined job descriptions.
  C. Failure of communication.
  D. Deadlines.
  B. Badly defined job descriptions.

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  If badly designed job descriptions occur, then the best resolution is reorganization.

• Question 522:

  Which of the following is a reason for a firm to remain in an industry despite poor profits?

  A. Lack of vertical integration.
  B. Economies of scale are not significant.
  C. The firm's assets have a low liquidation value.
  D. Distribution channels are willing to accept new products.
  C. The firm's assets have a low liquidation value.

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  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 523:

  A global industry is one that:

  A. Contains competitors that are multinationals.
  B. Has secured a competitive advantage based on economies of scale in centralized production.
  C. Has a strategic advantage by establishing coordinated competition in many national markets.
  D. Has made large direct investments abroad.
  C. Has a strategic advantage by establishing coordinated competition in many national markets.

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  The analysis of a competition in an industry requires consideration of the economics of the industry and the characteristics of competitors. However, in a global industry, the analysis is not limited to one market, but extends to all markets (geographic or national) taken together. Michael E. Porter defines a global industry as one in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions."Thus, an industry becomes global because it perceives a net strategic advantage to competing, as Porter says, in a coordinated way in many national markets."

• Question 524:

  Globalization and localization are shaping the competitive structure of industries. The scenario contributing to the most competitive environment is when:

  A. Global forces dominate.
  B. Local forces dominate.
  C. Mix of global and local forces dominate.
  D. Neither global nor local forces dominate.
  C. Mix of global and local forces dominate.

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  Competitiveness of firms is greatest, and the competitive environment is most intense, when the benefits of global integration and coordination and the benefits of localization (flexibility, proximity, and quick response time) are achieved.

• Question 525:

  X and Y are substitute products. If the price of product Y increases, the immediate impact on product Xis that its:

  A. Price will increase.
  B. Quantity demanded will increase.
  C. Quantity supplied will increase.
  D. Price, quantity demanded, and supplies will increase.
  B. Quantity demanded will increase.

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  By definition, if two goods are substitutes, the price of one and the demand for the other are directly related. For example, if the price of Y increases, the quantity demanded of X will increase.

• Question 526:

  According to the Boston Consulting Group's portfolio model for competitive analysis, the strategy fora strong cash cow should be

  A. Harvest.
  B. Divest.
  C. Hold.
  D. Build.
  C. Hold.

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  A hold strategy is used for strong cash cows. It is necessary if the business is to continue to generate large net cash inflows. Harvesting might impair a strong cash cow's ability to generate long-term positive net cash inflows.

• Question 527:

  Which of the following is an example of a two-party negotiation?

  A. A person sells a car to a used car dealer.
  B. A person requests a financial institution to pay another person.
  C. A person sells stock through a broker.
  D. A person sells a house through a real estate agent.
  A. A person sells a car to a used car dealer.

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  A person's sale of a car to a used car dealer is an example of a two-party negotiation. Only the seller and dealer are involved in the negotiations.

• Question 528:

  A manager can use power and authority to accomplish objectives. The relationship between these two important concepts is best explained as follows:

  A. Power is the right to do things, while authority is the ability to do things.
  B. Authority is the right to do things, while power is the ability to do things.
  C. Power and authority are both required to accomplish a task.
  D. Power and authority are simply two words that describe the same concept -- how to get things done in organizations.
  B. Authority is the right to do things, while power is the ability to do things.

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  Authority is the officially sanctioned privilege to direct others. A clear hierarchy of authority enhances coordination and accountability. Power is the ability to marshal organizational resources to obtain results. A manager may have both authority and power, or one without the other.

• Question 529:

  A firm that manufactures refrigerators sold ice boxes in urban areas of less developed countries. Many residents lacked electricity to power refrigerators but could purchase blocks of ice from local vendors for use in ice boxes. According to Keegan's model of adaptation strategies, this firm adopted a strategy of

  A. Product adaptation.
  B. Dual adaptation.
  C. Backward invention.
  D. Forward invention.
  C. Backward invention.

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  Using a product invention strategy, a new product is created specifically for a certain country or regional market. A product may either include advancements for developed countries or have certain elements removed in places where a lower cost is a key selling point. Thus, an ice box, a precursor of the modern refrigerator, is a backward invention.

• Question 530:

  When demand uncertainty is low, firms tend to adopt a strategy of preemptive expansion. The conditions for successful preemption expansion include which of the following?

  A. The firm should avoid market signals that alert competitors to the firm's plans.
  B. The expansion should be small relative to the market to minimize risk.
  C. Economies of scale should be large relative to demand.
  D. The business should be strategically vital to competitors.
  C. Economies of scale should be large relative to demand.

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  Economies of scale should be large in relation to demand, or the learning-curve effect should give an initial large investor a permanent cost advantage. For example, the preemptive firm may be able to secure too much of the market to allow a subsequent firm to invest at the efficient scale. That is, the residual demand available to be met by the later firm is less than the efficient scale of production. The later firm therefore must choose between intense competition at the efficient scale or a cost disadvantage.