IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 1031:

  At the introduction stage of an innovative product, the profit growth is normally slow due to

  A. Expensive sales promotion

  B. High competition

  C. A mass market

  D. Available alternatives

  Correct Answer: A

  The introduction stage is characterized by slow sales growth and lack of profits because of the high expenses of promotion and selective distribution to generate awareness of the product and encourage customers to try it. Thus, the per-customer cost is high. Competitors are few, basic versions of the product are produced, and higher-income customers (innovators) are usually targeted. Cost-plus are charged. They may initially be high to permit cost recovery when unit sales are low. The strategy is to infiltrate the market, plan for financing to cope with losses, build supplier relations, increase production and marketing efforts, and plan for competition.

• Question 1032:

  In a 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

  Correct Answer: B

  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 1033:

  Of the major processes affecting the evolution on 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 customer's industries

  D. Government policies

  Correct Answer: A

• Question 1034:

  During the growth stage of a product's life cycle,

  A. The quality of products is poor

  B. New product models and features are introduced

  C. There is little difference between competing products

  D. The quality of the products becomes more variable and products are less differentiated.

  Correct Answer: B

  In the growth stage, sales and profits increase rapidly, cost per customer decreases, customers are early adopters, new competitors enter an expanding market, new product models and features are introduced, and promotion spending describes or remains stable. The firm enters new market segments and distribution on channels and attempts to build brand loyalty and achieve the maximum share of the market. Thus, prices are set to penetrate the market, distribution channels are extended, and the mass market is targeted through advertising. The strategy is to advance by these means and by achieving economies of productive scale.

• Question 1035:

  The dominant firm in a market pursues a market-leader strategy. This strategy may involve

  A. Holding the market stable to avoid attracting new competitors

  B. A flank defense to strengthen the firm's brand

  C. Sending market signals as a mobile defense

  D. Innovations as an offensive strategy

  Correct Answer: D

  Constant innovation to improve products and services, control costs, and increase distribution effectiveness is the basis for a good offensive strategy. The leader must continuously improve the value offered to customers.

• Question 1036:

  A runner-up firm in a market may choose a market-challenger strategy. Which general attack strategy adopted by a market challenger is directed at a gap in customer need fulfillment?

  A. Guerilla warfare

  B. Bypass attack

  C. Frontal attack

  D. Flank attack

  Correct Answer: D

  A flank attack may be directed at a geographic or segmental weakness of the target (an underserved market) or an unmet need (such as the desire for more healthful fast food). A flank attack succeeds when market segments shift. The result is a gap in need fulfillment that the attacker can convert into a strong position in a profitable segment.

• Question 1037:

  According to Author D. Little, a competitor firm that can act independently and sustain its long-term status irrespective of the behavior of others holds which of the following competitive positions?

  A. A dominant position

  B. A strong position

  C. A favorable position

  D. A tenable position

  Correct Answer: B

  Evaluating a competitor's market position is necessary to judge how and whether to challenge it. A firm that is in a strong competitive position can act independently and sustain its long-term status irrespective of the behavior of others.

• Question 1038:

  A strategic group analysis does all but which of the following?

  A. Determines what mobility barriers exist

  B. Forecasts future group actions and trends

  C. Considers how the firm compares with the competitors within the chosen strategic group

  D. Predicts reaction patterns to events such as competitive attacks

  Correct Answer: C

  An overall industry analysis, not a strategic group analysis, considers how the firm compares with the competitors within the chosen strategic group, e.g., on the basis of its scale of operations, the intensity of group rivalry, and the differences in the ability of the group members to implement their strategies.

• Question 1039:

  UniCorp produces uniforms that it sells an rents to businesses. It recently acquired a textile mill that produces synthetic cloth. This acquisition is an example of

  A. Capacity expansion Forward integration

  B. Capacity expansion Backward integration

  C. Vertical Integration Forward integration

  D. Vertical Integration Backward integration

  Correct Answer:

  The degree of backward and forward vertical integration along the value chain varies with the industry. Unicorp acquired one of its suppliers, which is on a different level of the value chain. Thus, the combination involved vertical integration. Moreover, the acquisition of a supplier is characteristic of backward integration.

• Question 1040:

  Which of the following statements is true with regard to a vertically integrated acquisition?

  A. A grocery store chain that purchase a diary and begins to make milk-base products under its own brand is forward integrated

  B. A movie producer that acquires a chain of theaters is backward integrated

  C. a clothing manufacturer that acquires a chain of clothing stores is forward integrated

  D. A soda maker that purchases its leading competitor is backward integrated

  Correct Answer: C

  Vertical integration occurs upstream (backward) by acquiring suppliers or downstream (forward) by acquiring wholesalers and retailers. An example of forward integration is clothing manufacturer's acquisition of a chain of clothing stores in which to sell kits products.