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Exam Code: IIA-CIA-Part4
Exam Name: Certified Internal Auditor - Part 4, Business Management Skills
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Updated: 2014-10-19
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NO.1 Which of the following is least likely to be an example of synergy?
A. A shopping mall with several businesses providing different products and performing different
services.
B. A car dealership providing warranties on automobile parts to maximize customer value.
C. A manufacturing company hiring a new manager with technological experience lacking in the
company.
D. Military Humvees being converted into sports utility vehicles for sale to civilians.
Answer: B
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Explanation:
Synergy occurs when the combination of formerly separate elements has a greater effect than the
sum of their individual effects.
However, a car dealership's provision of warranties reflects anoperational strategy designed to
provide post-purchase services to gain a competitive advantage and maximize customer value. It
does not reflect the complementary sharing of resources, technology, or competencies. In contrast,
synergy arises from selling a line of carsthat share some components or abrand identification.
NO.2 Which of the following is not one of the advantages of self-managed teams?
A. Motivation is improved because decision making is decentralized.
B. Improved processes of production if the teams are supported properly.
C. Managerial acceptance by tradition-oriented managers.
D. Improved communication because all members understand the team's activities better.
Answer: C
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Explanation:
Managerial resistance is often the primary obstacle of self-managed teams. Organizational change is
difficult and tradition-oriented managers tend to regard self-managed teams as a threat to their
status.
NO.3 Some studies show that managers spend 60 to 70% of their time communicating and that
nearly 60% of that time is spent listening. Listening effectiveness is best increased by:
A. Resisting both internal and external distractions.
B. Waiting to review key concepts until the speaker is through talking.
C. Tuning out messages that do not seem to fit the meeting purpose.
D. Factoring in biases to evaluate the information being given.
Answer: A
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Explanation:
Concentrating on what the speaker is saying is critical to effective listening. This result is best
achieved by resisting internal and external distractions. Physical distractions such as noise, a
tendency to be overly aware of the speaker's physical and other differences from the listener,
focusing on interesting details at the expense of major points, or emotional reactions to a statement
with which the listener disagrees should be avoided.
NO.4 The creation of regional free trade zones is a global phenomenon. Trade barriers are lowered
in these areas, and other steps are taken to promote economic cooperation. For example, a
common currency has been adopted by the nations of:
A. NAFTA.
B. Mercosul.
C. APEC.
D. The European Union.
Answer: D
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Explanation:
The European Union (Eli) is a collection of 27 European nations that have lowered trade barriers
among member states, and most of the nations share a common currency and trade policy. The
euro is the common currency of the European Union.
NO.5 A corporation is performing research to determine the feasibility of entering the truck rental
industry.The decision to enter the market is most likely to be deterred if:
A. Buyer switching costs are high.
B. Buyers view the product as differentiated.
C. The market is dominated by a small consortium of buyers.
D. Buyers enjoy large profit margins.
Answer: C
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Explanation:
When purchasing power is concentrated in a few buyers or when buyers are well organized, their
bargaining power is greater. This effect is reinforced when sellers are in a capitalintensive industry,
such as trucking.
NO.6 Paul Hersey and Ken Blanchard developed a situational leadership model with two
dimensions:task and relationship behaviors. In this model, the delegating leadership style is
appropriate when followers have:
A. Low maturity.
B. Low to moderate maturity.
C. Moderate to high maturity.
D. High maturity.
Answer: D
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Explanation:
The dimensions of the delegating leadership style are low task and low relationship. Consequently,
task- and relationship-related behaviors are low. The leader provides little direction or support
because the maturity of followers is high. They are willing and able to do what is necessary.
NO.7 Many factors cause firms to overbuild, resulting in industry overcapacity. The structural
factor that may lead to overbuilding is:
A. A reduction in supplier prices.
B. A shallow learning curve.
C. An absence of exit barriers.
D. The presence of a strong market leader.
Answer: A
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Explanation:
Suppliers of capital, equipment, materials, etc., face their own competitive pressures. Thus, lower
supplier prices, government subsidies, favorable interest rates, and similar incentives may promote
expansion by customer industries.
NO.8 With the shift in some countries' economies toward service industries, a new form of
organization has developed. This organization structure is referred to as the professional
bureaucracy. While this structure resembles the machine bureaucracy which relies on standardized
work processes) in several respects, it is different in one key aspect. This significant difference is that
in a professional bureaucracy:
A. Senior management has had to give up a substantial amount of control.
B. Tasks are accomplished with a high degree of efficiency.
C. There is strict adherence to rules.
D. There is a tendency for subunit conflicts to develop.
Answer: A
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Explanation:
A professional bureaucracy e.g., a university or library) is a complex and formal but decentralized
organization in which highly trained specialists have great autonomy. The jobs performed by these
professionals require years of education and training. By their nature, such jobs can be performed
effectively only if the employees are afforded substantial autonomy.
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