IIA IIA Certifications IIA-CIA-PART4 Questions & Answers

• Question 481:

  A company sells a diverse line of cookies. Its acquisition of another company, a maker of cake mixes, is most likely an example of

  A. Vertical integration.

  B. Horizontal diversification.

  C. Concentric diversification.

  D. Conglomerate diversification.

  Correct Answer: B

  Horizontal diversification is the acquisition of businesses making products unrelated to current offerings but that might appeal to the firm's current customers. Cookies and cake mixes are based on different technologies but may be demanded by the same customers.

• Question 482:

  A starting point for developing competitive strategies is customer value analysis (CVA). According to theCVA approach.

  A. Customer value equals customer benefits.

  B. Bad competitors rather than good competitors should be targeted.

  C. Strong competitors should be avoided even when they have exploitable weaknesses.

  D. Distant competitors are the usual threats.

  Correct Answer: B

  Bad competitors should be targeted rather than good competitors. The former disturb the competitive equilibrium, e.g., by excessive expansion of capacity or overly risky behavior. The latter make sound business decisions that promote the long-term health of the industry, e.g., about prices, entry into newsegments, and pursuit of market share.

• Question 483:

  Usually, the cheapest way to gain market share is by targeting what class of competitors?

  A. Close competitors.

  B. Distant competitors.

  C. Weak competitors.

  D. Bad competitors.

  Correct Answer: C

  Using the results of a customer value analysis, a firm may target a given class of competitors in order to gain market share. Although there are various methods, targeting weak competitors is usually the cheapest way to gain market share because weak competitors generally do not offer much resistance.

• Question 484:

  Which of the following are steps in a customer value analysis (CVA)?

  I. Determining what customers value

  II.

  Having customers rank the relative significance of the elements of customer value III.Evaluating how well the firm and its competitors perform relative to the elements of customer value IV.Focusing on performance with respect to each element of customer value

  A.

  I, Ill, and IV only.

  B.

  I, II, and Ill only.

  C.

  I, II, and Ill only.

  D.

  I, II, Ill, and IV.

  Correct Answer: D

  The steps in a CVA are to:

  Determine what customers value.

  Assign quantitative amounts to the elements of customer value and have customers rank their relative significance.

  Evaluate how well the firm and its competitors perform relative to each element.

  Focus on performance with respect to each element, vis-a-vis an important competitor in a given market segment.

  Repeat the foregoing steps as circumstances change.

• Question 485:

  Which of the following is not a step in the establishment of a competitive intelligence system?

  A. Data analysis.

  B. Data collection.

  C. Information dissemination.

  D. Classification of competitors.

  Correct Answer: D

  A competitive intelligence system is established to identify competitor strategies, monitor their new-product introductions, analyze markets for the firm's own new-product introductions and acquisitions, obtain information about nonpublic firms, evaluate competitor RandD activity, learn about competitors' senior executives, and perform other necessary information gathering tasks. Its establishment consists of setting up the system, collecting data, analyzing the data, and disseminating the information. Classification of competitors, however, is not a step in this process. Competitors are classified and targeted by a firm based on that classification following the results of a customer value analysis (CVA).

• Question 486:

  Edward T. Hall has distinguished between high-context and low-context cultures. Which culture is high-context?

  A. United States.

  B. Canada.

  C. Germany.

  D. Japan.

  Correct Answer: D

  Hall drew a distinction between high-context and low-context cultures. In high-context cultures (e.g., Japanese, Chinese, Arabic, and Korean), much meaning is transmitted by nonverbal cues and situational circumstances. Thus, a person's

  status in a firm, rank in society, and reputation convey the primary message.

  Section 2:Sec Two (51 to 90)

  Details:

  Industry and Market Analysis

• Question 487:

  In some regions of the world, business is conducted more often through personal relationship building than through legal contracts. This is an example of a

  A. Cultural factor.

  B. Commercial factor.

  C. Technical factor.

  D. Legal factor.

  Correct Answer: A

  In high-context cultures (e.g., Japanese, Chinese, Arabic, and Korean), much meaning is transmitted by nonverbal cues and situational circumstances. Thus, a person's status in a firm, rank in society, and reputation convey the primary message. In low-context cultures (e.g., Northern Europe and North America), primary messages are transmitted verbally. Hence, precise written contractual agreements are highly valued. In contrast, social events aremore highlyvalued in a high-context culture. Attitudes, tastes, behavior, and social codes are culturalfactors. Accordingly, a preference for personal relationships rather than precise writtencontracts is a cultural factor.

• Question 488:

  Dutch researcher Geert Hofstede has examined the cultural dimensions of organizational behavior in 40 countries. The United States ranked the highest in which dimension?

  A. Power distance.

  B. Uncertainty avoidance.

  C. Individualism.

  D. Masculinity.

  Correct Answer: C

  The individualism-collectivism dimension addresses whether the organization or individual must meet his/her own security needs.

• Question 489:

  According to Edward T. Hall, the perception of time is monochronic or polychronic. Which cultures perceive time as monochronic?

  A. Northern European.

  B. Latin American.

  C. Arabic.

  D. Mediterranean.

  Correct Answer: A

  The perception of time as it relates to business and social life varies with the culture. Polychronic time is based on a perception that time is nonlinear, flexible, and multidimensional. This perception is typical of Mediterranean, Latin American, and Arabic cultures. Monochronic time is based on a perception that time is the same for everyone and is measurable in standard units. This perception is common in Northern Europe and the U.S. These western cultures believe in punctuality and that time is money and should not be wasted.

• Question 490:

  Which country is best described as having an individualistic culture?

  A. India.

  B. Japan.

  C. Canada.

  D. China.

  Correct Answer: C

  Individualistic cultures are societies that place a higher value on the rights and accomplishments of individual persons within the society. Examples are the U.S., U.K,Canada, and Australia. Collectivist cultures focus much more on the goals of family, friends, country, and the organization. Examples are China, India, Mexico, Japan, and Egypt.