IIA-CIA-PART3 Online Practice Questions and Answers

Correct Answer: B

A polycentric attitude assumes that cultural differences require local managers to make most decisions because they are more knowledgeable about local conditions than are central administrators. Thus, development of local managerial talent is crucial. Another result is that foreign operating performance is primarily evaluated based on results. As a consequence, methods, training, and incentives vary significantly among subsidiaries. Furthermore, control is predominantly local, the firm is identified with the nationality of the host nation, and relatively little communication occurs with central administration or among subsidiaries. One disadvantage is that local operations may have inefficiencies because of duplication of activities. Another disadvantage is loss of goal congruence between local entities and the firm as a whole. Advantages are more capable and motivated local managers, better results in local markets, local development of new product ideas, and stronger support by host governments. Accordingly, the polycentric attitude adapts to each local environment.

Correct Answer: C

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

Correct Answer: B

Subsidies are a structural characteristic of an emerging market. If a subsidy is given by the government or other party, it usually assists the growth of the new industry instead of hindering it. Subsidies tend to focus on radically new technology or technology in which societal concern is strong.

Correct Answer: C

As the team members work and socialize, cohesiveness will be enhanced because of the opportunity to discover commonalities and share experiences. However, performance may or may not improve as cohesiveness increases. Improvement is also contingent on the group's performance norms. A cohesive group enforces norms. Thus, if norms are high, greater cohesiveness should result in better performance.

Correct Answer:

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. The five forces are (1) the degree of rivalry among existing firms; (2) threats of, and barriers to, entry; (3) the threat of substitute products or services; (4) the threat of buyers' bargaining power; and (5) the threat of suppliers' bargaining power.

Correct Answer: D

The most favorable condition for the attractiveness of an industry is the existence of high entry barriers and low exit barriers. When the threat of new entrants is minimal and exit is not difficult, returns are high, and risk is reduced in the event of poor performance. Low entry barriers keep long-term profitability low because new firms can enter the industry, increasing competition and lowering prices and the market shares of existing firms. Exit barriers are reasons for a firm to remain in an industry despite poor (or negative) profits.

Correct Answer: D

The intensity of rivalry and the threat of entry may vary with the extent of capacity expansion dictated by the need to achieve economics of scale. If it must be made in large increments to achieve economics of scale, competition will be more intense. The need for large-scale expansion to achieve production efficiency may result in an excess of industry capacity over demand. However, if capacity may be expanded in small increments, industry capacity is less likely to be excessive, the supply-demand balance is less likely to be upset, and price cutting is less likely to be necessary.

Correct Answer: B

In a fragmented industry, many firms might be affected but not significantly. These firms also might have no ability to retaliate. Firms in a fragmented industry have insignificant market shares and little influence on industry outcomes.

Correct Answer: B

Managers must always consider the perceptions of a message recipient. Recipients vary in their perception of messages because of background, language, education, attitudes toward the sender such as stereotyping) and job, etc. This variance can result in communication distortion at any stage of the communication process.

Correct Answer: D

Horizontal communication between departments is often subject to more problems than either upward or downward communication within a single department. Examples of these problems include the use of technical terms understood by only one side in the communication process, faulty channel selection, and interpersonal problems. To overcome these difficulties, the sender must encode the message in the context of the receiver's perceptions; that is, the sender mustunderstand the receiver. The sender must establish an interpersonal climate that encourages the elimination of interpersonal barriers to communication. A performance appraisal prepared by the accountant's supervisor will not help the accountant understand the perceptions of people in other departments.

Correct Answer: B

Listening entails decoding and understanding the first message sent. The sender then becomes a listener with respect to the feedback. Hence, listening is necessary at both ends of the communication channel. Other aids to effective listening are using body language to encourage the speaker, showing appropriate emotion to signify sympathy, understanding and correcting for one's biases, avoiding making premature judgments, and briefly summarizing what has been said.

Correct Answer: B

Correct Answer: A

Correct Answer: C

Correct Answer: D