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

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 71:

  The punishing of employees is made less effective by

  A. Stating the offending behavior specifically.
  B. Postponing the start of disciplinary procedures.
  C. Permitting employees to challenge individual culpability.
  D. Focusing the discussion on the offending behavior instead of the offender.
  B. Postponing the start of disciplinary procedures.

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  The most effective discipline requires immediate corrective action to eliminate the negative effects of the undesirable employee conduct and to establish and reinforce appropriate behavior. Delay merely invites more serious consequences. Moreover, the punishment should becommensurate with the offense, and the employee should clearly perceive the relationship between the punishment and the behavior.

• Question 72:

  Which of the following is considered a disadvantage of electronic communication?

  I. Information overload.

  II. Misrepresentation of feelings and emotions.

  III. Reduced transmission time.

  IV.

  Lack of paper trail.

  A. I and II only.
  B. II and IV only.
  C. I, II, and Ill only.
  D. I, II, III, and IV.
  I. Information overload. II. Misrepresentation of feelings and emotions. III. Reduced transmission time. IV. Lack of paper trail.
  A. I and II only.

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  Information overload and misrepresentation of feelings and emotions are drawbacks of electronic communication. Information overload, such as numerous email messages, may lead to lost time and inefficiencies. Also, email cannot accurately convey the feeling and tone intended by the person initiating the communication. Accordingly, it may be misinterpreted by the receiver.

• Question 73:

  An information flow factor that may lead to industry overcapacity is:

  A. The need to give assurance to large customers.
  B. Stable industry structure.
  C. Presence of tax incentives.
  D. Untrustworthy market signaling.
  D. Untrustworthy market signaling.

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  Market signaling may be ineffective because it is no longer regarded as credible. Firms' signals may no longer be trusted as indicators of planned moves, such as expansion, because of new entrants, a period of bitter rivalry, or other reasons. Credible signaling fosters orderly expansion by allowing all parties to plan effectively.

• Question 74:

  General Electric has popularized a model for competitive analysis. In this portfolio matrix,

  A. Each of the firm's businesses is represented by a circle proportional to its size.
  B. Business strength and market attractiveness are measured using a multifactor index.
  C. The number of cells varies with the number of factors used by the firm in its analysis.
  D. The four quadrants represent combinations of high or low market growth rates and business profitability.
  B. Business strength and market attractiveness are measured using a multifactor index.

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  The GE model is a multifactor portfolio matrix with two variables. Business strength or competitive position (BUS) is on one axis, and market attractiveness (MAT) is on the other. To measure BUS and MAT, the firm must isolate the multiple factors affecting each, quantify them, and create an index. Factors will vary with each business. The measurements will provide the values on the exes of the matrix.

• Question 75:

  In which of the following industry environments would an internal auditor be most likely to recommend strategies such as franchising and horizontal mergers?

  A. Emerging industries.
  B. Declining industries.
  C. Fragmented industries.
  D. Mature industries.
  C. Fragmented industries.

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  Strategies such as chaining, franchising, and horizontal mergers are commonly used in fragmented industries. Overcoming fragmentation has significant strategic payoffs given that entry is not costly and competitors are weak. If the factor(s) preventing consolidation can be eliminated, industry structure will change. Isolating factors responsible for fragmentation has been achieved in, for example, the fast food industry. The need to have numerous local operations under tight control and near customers has been isolated or neutralized by franchising to local owners. The franchisor provides national advertising, centralized purchasing, and other services, which result in economies of scale and industry consolidation. In effect, the service or production function is separated from the rest of the business. Also, acquisitions (horizontal mergers) that enable a firm to expand when competing with local firms might be difficult because of their contacts and image.

• Question 76:

  A firm in a fragmented industry should most likely take what action to avoid a strategic trap?

  A. Seek dominance to overcome fragmentation.
  B. Assume that competitors have similar costs.
  C. Avoid centralization of the organizational structure.
  D. Invest heavily to respond quickly to new product demand.
  C. Avoid centralization of the organizational structure.

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  Over centralization of the organizational structure is often a mistake. In the intense competition of a fragmented industry, quick response times, local contacts, personal service, and tight operating control are essential.

• Question 77:

  Which of the following elements of an organization requires people to be accountable to superiors?

  A. Coordination of effort.
  B. Division of labor.
  C. Common goal or purpose.
  D. Hierarchy of authority.
  D. Hierarchy of authority.

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  A hierarchy of authority requires people to be accountable to their superiors in the hierarchy.

• Question 78:

  Strategic management includes establishment of appropriate controls. Control measurements are made to determine whether organizational objectives are being achieved. One category of strategic control measures concerns external effectiveness. A measurement relating to external effectiveness is:

  A. Cycle time.
  B. Waste.
  C. Flexibility.
  D. Productivity.
  C. Flexibility.

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  Strategic control measures may be categorized as concerning either external effectiveness or internal efficiency. Flexibility overlaps these categories. It relates to effectiveness and efficiency. Thus, an organization must be externally flexible in responding to changing customer needs and internally flexible in reordering its structural arrangements, retraining employees, etc.

• Question 79:

  A competitive factor that may lead to overbuilding in an industry is:

  A. The need of large customers to know that capacity exists to meet their long-term requirements.
  B. The lack of a credible market leader.
  C. The advantage held by the capacity leader.
  D. The existence of high entry barriers.
  B. The lack of a credible market leader.

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  The lack of a credible market leader makes for a less orderly expansion. A stronger leader can retaliate effectively against inappropriate expansion by others. The following are other such factors:

  (1) many firms with the ability to add capacity are seeking to improve market share; (2) new entrants, possibly encouraged by low entry barriers and favorable economic conditions, may cause or intensify overcapacity; and (3) first mover advantages may be significant; thus, shorter lead times for ordering equipment, lower costs, and the ability to exploit an excess of demand over supply may encourage too many firms to expand.

• Question 80:

  Prior announcements of moves have value as market signals in part because an announced move need not actually occur. Which of the following is true regarding the effects of prior announcements of moves on the market?

  I. The effects may preempt competition

  II. The effects may express pleasure or displeasure with a competitor's action

  III. The effects may be a means of ending all external debate

  IV.

  The effects may test competitor sentiment

  A. I, II, and Ill only.
  B. I, II, and IV only.
  C. II, Ill, and IV only.
  D. I, II, Ill, and IV.
  I. The effects may preempt competition II. The effects may express pleasure or displeasure with a competitor's action III. The effects may be a means of ending all external debate IV. The effects may test competitor sentiment
  B. I, II, and IV only.

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  Among other things, prior announcements of moves may preempt competition, threaten action, test competitor sentiment, express pleasure or displeasure with a competitor's action, and act as a means of ending internal debate. Moreover, prior announcements of moves may be a means of ending some external debate (i.e., if the announcement was aimed at the financial community in order to answer questions about the firm's liquidity). However, all external debate would be impossible to end, even by means of prior announcements of moves.