IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 1211:

  Which of the following is a favorable condition for a firm competing in a profitable, expanding industry?

  A. The firm doest not have a string customer base.

  B. A few suppliers who can restrict supply.

  C. Competitors find it difficult to acquire the firm's customers.

  D. The firm has high costs relative to other firms in the industry.

  Correct Answer: C

  A firm that has successfully differentiated its products through developing a desirable image, better services, cost leadership, the features of the product, or other means is in a favorable competitive position. Competitors find if difficult to acquire the firm's customers, for example, by price cutting. The reason is that the firm's products are perceived to have few substitutes, and brand loyalty is high. Furthermore, barriers to entry are favorable to the firm. These barriers beter competitors from entering the market. Existing firms can increase market share and emphasize cutting costs and increasing value.

• Question 1212:

  The concurrent action of basic competitive forces as defined by Porter's model determines

  A. The long-term profitability and the competitive intensity of the industry.

  B. The entrance barriers that potential players must face to get into the industry.

  C. The rivalry inside the industry.

  D. The strategy that a firm should follow to achieve its objectives.

  Correct Answer: A

  Michael E. Porter, a leader in the field of strategic management, has developed a comprehensive model of the structure of industries and competition. One feature is his analysis of the five competitive forces that determine long-term profitability measured by long-term return on investment. This analysis determines the attractiveness of an industry.

• Question 1213:

  Which factor most likely encourages entry into an existing market?

  A. Government subsidies for new investors.

  B. High product differentiation, principally produced by trademarks.

  C. Knowledge of the industry, with high investments in developments.

  D. Low fixed exit costs.

  Correct Answer: A

  Subsidies for new firms lower entry barriers. Thus, new firms may enter the industry and intensify competition. Government policy also may affect competition via regulations that encourage or discourage substitutes or affect costs, that govern competitive behavior, or that limit growth. Government also may be a buyer or supplier.

• Question 1214:

  Which condition does not increase the threat of new competitor entry into the industry?

  A. Strong brand identity

  B. Existing firms do not enjoy the cost advantages of vertical integration.

  C. Few proprietary product differences.

  D. Low capital requirements.

  Correct Answer: A

  Strong brand identity decreases the threat that new competitors will enter an industry. New competitors have difficulty because potential customers are loyal to established firms in the industry.

• Question 1215:

  An organization's policies and procedures are part of its overall system of internal controls. The control function performed by policies and procedures is

  A. Feedforward control

  B. Implementation control

  C. Feedback control

  D. Application control

  Correct Answer: A

  Feedforward control anticipates and prevents problems. Policies and procedures serve as feed-forward control because they provide guidance on how activity should be performed to best insure that an objective is achieved.

• Question 1216:

  In an organization with empowered work teams, organizational policies

  A. Should define the limits or constraints within which the work teams must act if they are to remain self-directing.

  B. Become more important than ever. Without clear rules to follow, empowered work reams are almost certain to make mistakes.

  C. Should be few or none. The work reams should have the freedom to make their own decisions.

  D. Should be set by the teams themselves in periodic joint meetings.

  Correct Answer: A

  Work reams are not "empowered" to do anything they please. The organization has certain expectations for what is to be accomplished and how the reams are to go about accomplishing these expectations. Once the organization defines its objectives and sets appropriate policies, the work teams are able to make and implement decisions within those boundaries. Policies in this context are usually quite broad

  ( e.g. , relating to ethical business conduct) but nevertheless important.

• Question 1217:

  Policies and procedure provide guidance to management and employees. Would policies and procedures

  normally be found for the senior management of a multinational organization?

  A. Yes, all policies and procedures are developed by senior management.

  B. No, senior management develops policies and procedures for lower levels only.

  C. Yes, policies and procedures are used throughout on organization's ranks.

  D. No, only middle managers and below develop and use policies and procedures.

  Correct Answer: C

  Research has shown that policies and procedures are referred to by all levels of management on an as-needed basis.

• Question 1218:

  A firm's statement of broad objectives or mission statement should accomplish all of the following except

  A. Outlining strategies for technological development, market expansion, and product differentiation.

  B. Defining the purpose of the company.

  C. Providing an overall guide to those in high-level, decision-making positions.

  D. Stating the moral and ethical principles that guide the actions of the firm.

  Correct Answer: A

  The determination of organizational objectives is the first step in the planning process. A mission statement is a formal, written document that defines the organization's purpose in society, for example, to produce and distribute certain goods of high quality in a manner beneficial to the public, employees, shareholders, and other constituencies. Thus, a mission statement does not announce specific operating plans. It does not describe strategies for technological development, market expansion, or product differentiation because these are tasks for operating management.

• Question 1219:

  A manufacturing company produces plastic utensils for a particular segment at the lowest possible cost. The company is pursuing a cost.

  A. Leadership strategy

  B. Focus strategy

  C. Differentiation strategy

  D. Containment strategy.

  Correct Answer: B

  A cost focus strategy aims at cost leadership in a particular segment, such as a regional market or a specially product line. The rationale for a focus strategy is that the narrower market can be better served.

• Question 1220:

  In planning and controlling capital expenditure, the most logical sequence is to begin with

  A. Analyzing capital addition proposals.

  B. Making capital expenditure decisions.

  C. Analyzing and evaluating all promising alternatives.

  D. Identifying capital addition projects and other capital needs.

  Correct Answer: D

  Capital budgeting is a long-term planning process for investments. This process begins with the identification of capital needs, that is, of projects required to achieve organizational goals. The next step is to search for specific investments. The third step is to acquire and analyze information about the potential choices. The fourth step is to select specific investments after considering both qualitative and quantitative factors. The fifth step is to finance the undertakings. The final step is implementation and monitoring.