IIA IIA Certifications IIA-CIA-PART3 Questions & Answers

• Question 741:

  After three years of steadily decreasing profits despite of increased sales and a growing economy, which of the following is the preferred course of action for a chief executive officer to take?

  A. Set a turnaround goal of significantly increasing profits within two months.

  B. Reduce staff by 10 percent in every unit.

  C. Reduce staff in the nonvalue-adding functions by 20 percent.

  D. Encourage innovation at all levels and use an early retirement program to reduce staff size.

  Correct Answer: D

  (Organizational decline loss of effectiveness and efficiency coupled with inflexibility) may lead to downsizing, merger, reorganization, or liquidation. It results from decreased demand, resource limitations, or mismanagement. One characteristic of a declining organization is lack of innovation. Moreover, the most important cause of organizational decline is management complacency. In turn, a characteristic of management complacency is lack of innovation. Consequently, the CEO should encourage innovation at all levels. Also, downsizing has many negative effects. The enlightened view is that employees are not readily disposable commodities, but rather valuable resources who should be terminated only as a last resort. This view seeks alternatives to involuntary termination. One such alternative is a voluntary retirement program that offers accelerated retirement benefits, severance allowances, or other compensation.

• Question 742:

  Which of the following is the best measure of productivity to use to evaluate several departments in a large retail store?

  A. Number of customers served per employee per day.

  B. Revenue per square foot.

  C. Number of units sold per department per day.

  D. Average number of units stocked per month per department.

  Correct Answer: B

  Productivity is the ratio of real output to a unit of input. Increased productivity is the goal of every organization because its effect is to improve the ultimate measures of performance, such as the profits of a business. For a retail store, a critical output of interest is revenue per square foot. The floor space in the store is a limited resource whose productivity should be analyzed.

• Question 743:

  A new manager of a production department has been asked to assess the effectiveness of that department. The organization needs to satisfy both internal and external constituents and takes a broad approach to effectiveness. To complete the assignment successfully, the manager should:

  A. Measure the daily productivity of the department.

  B. Do a survey of employee morale, as it is often a major underlying factor in productivity.

  C. Compare the past year's production against annual goals.

  D. Consider short-, medium-, and long-term effectiveness.

  Correct Answer: D

  Kreitner Management, 9th ed., page 298) states, "Organizational effectiveness can be defined as meeting organizational objectives and prevailing societal expectations in the near future, adapting and developing in the intermediate future, and surviving in the distant future." In the near term about one year), it should be effective in achieving its goals, efficient in its use of resources, and a source of satisfaction to its constituencies owners, employees, customers, and society). In the intermediate term 2 to 4 years), it should adapt to new possibilities and obstacles and develop its abilities and those of its members. In the long term 5+ years), the organization should be able to survive in an uncertain world.

• Question 744:

  Which of the following has been identified as the most important cause of organizational decline?

  A. Centralization.

  B. Management complacency.

  C. Poor employee morale.

  D. Lack of innovation.

  Correct Answer: B

  Management complacency often is characterized by a lack of innovation, faulty perception of markets and competition, failure to observe or appraise the initial indicators of decline, and lack of focus on daily objectives. Therefore, the characteristics listed are the product of poor management.

• Question 745:

  Faced with 3 years of steadily decreasing profits despite increased sales and a growing economy, which of the following is the healthiest course of action for a chief executive officer to take?

  A. Set a turnaround goal of significantly increasing profits within 2 months.

  B. Reduce staff by 10% in every unit.

  C. Reduce staff in the nonvalue-adding functions by 20%.

  D. Encourage innovation at all levels and use an early retirement program to reduce staff size.

  Correct Answer: D

  Organizational decline loss of effectiveness and efficiency coupled with inflexibility) may lead to downsizing, merger, reorganization, or liquidation. It results from decreased demand, resource limitations, or mismanagement. One characteristic of a declining organization is lack of innovation. Moreover, the most important cause of organizational decline is management complacency. In turn, a characteristic of management complacency is lack of innovation. Consequently, the CEO should encourage innovation at all levels. Also, downsizing has many negative effects. The enlightened view is that employees are not readily disposable commodities, but rather valuable resources who should be terminated only as a last resort. This view seeks alternatives to involuntary termination. One such alternative is a voluntary retirement program that offers accelerated retirement benefits, severance allowances, or other compensation.

• Question 746:

  A corporation adheres to an open-systems perspective belief that the organization must adapt to changes in the environment to be successful. Which of the following would be inconsistent with the corporation following an open-systems framework?

  A. The corporation attempts to utilize resources in order to be self-sufficient.

  B. The corporation experiments with different production methods to find the method that is the most efficient and effective.

  C. The corporation emphasizes the overall result of projects instead of the individual inputs.

  D. The corporation requires employees to undergo monthly training seminars.

  Correct Answer: A

  Open systems acknowledge the need to interact with their environment and therefore are not able to be self-sufficient. Self-sufficiency is a quality inherent in closed systems because closed systems try to avoid interaction with the external environment.

• Question 747:

  Although bureaucracy is often perceived negatively by the public, bureaucracy is a feature of nearly every large company. Which of the following is a sign that a bureaucracy is dysfunctional?

  A. A diversity of jobs.

  B. Rules that obscure responsibility.

  C. A large number of rules necessary for day to day operations.

  D. Obedience to authority.

  Correct Answer: B

  A sign that a bureaucracy is dysfunctional is the development of rules that are meaningless or that obscure accountability. A lack of accountability shows that the bureaucracy is ineffective at identifying the source problems and creating solutions to solve the problems.

• Question 748:

  Which of the following concepts is not consistent with a successful authoritarian organization?

  A. Each subordinate should only have one superior.

  B. Superiors may have as many subordinates as possible within the superior's span of control.

  C. Responsibility may be delegated.

  D. The hierarchy of authority should be precisely defined.

  Correct Answer: C

  Taylor, Fayol, and other traditionalists advocated the creation of authoritarian organizations. One of the criteria for success was the ability to delegate authority but not responsibility. Responsibility should always remain with the person who made the decision.

• Question 749:

  Organizational charts often represent the formal structure of an organization. Often the organizational chart represents a pyramid with the chief executive on the top and the operating workforce on the bottom. Which of the following would not be included in a typical organizational chart?

  A. The span of control and the number of organizational levels.

  B. Communication channels.

  C. Promotional or career tracks.

  D. Informal influence or friendships.

  Correct Answer: D

  Organizational charts often show the formal relationships between employers and employees. However, a shortcoming of organizational charts is that they do not show informal relationships between the upper and lower levels of the corporate hierarchy.

• Question 750:

  A public university would be considered which type of organization?

  A. Commonweal organization.

  B. Business organization.

  C. Nonprofit service organization.

  D. Mutual benefit organization.

  Correct Answer: C

  Nonprofit service organizations include charities and universities. Nonprofit service organizations serve particular groups of clients.