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IIA IIA-CIA-PART4 Exam
Certified Internal Auditor - Part 4, Business Management Skills (Page 12 )

Updated On: 12-Jan-2026
Page 12 of 108
PDF with 535 Questions

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

  1. Data analysis.
  2. Data collection.
  3. Information dissemination.
  4. Classification of competitors.

Answer(s): D

Explanation:

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 R&D 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).



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

  1. I, Ill, and IV only.
  2. I, II, and Ill only.
  3. I, II, and IV only.
  4. I, II, Ill, and IV).

Answer(s): D

Explanation:

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.



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

  1. Close competitors.
  2. Distant competitors.
  3. Weak competitors.
  4. Bad competitors.

Answer(s): C

Explanation:

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.



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

  1. Customer value equals customer benefits.
  2. Bad competitors rather than good competitors should be targeted.
  3. Strong competitors should be avoided even when they have exploitable weaknesses.
  4. Distant competitors are the usual threats.

Answer(s): B

Explanation:

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.



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

  1. Vertical integration.
  2. Horizontal diversification.
  3. Concentric diversification.
  4. Conglomerate diversification.

Answer(s): B

Explanation:

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.



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