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Free IIA-CIA-PART4 Exam Braindumps (page: 15)

Page 14 of 134
PDF with 535 Questions

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.



A strategic business unit (SBU) has a relative market share (RMS) of 2.0 and a market growth rate (MGR) of 9.5%. According to the portfolio model for competitive analysis created by the Boston Consulting Group, such an SBU is considered a

  1. Star.
  2. Question mark.
  3. Cash cow.
  4. Dog.

Answer(s): C

Explanation:

The annual MGR reflects the maturity and attractiveness of the market and the relative need for cash to finance expansion. An MGR of 10% or more is generally regarded as high. The RMS reflects an SBU's competitive position in the marketsegment. An RMS of 1.0 or moresignifies that the SBU has a strong competitive position. Cash cows have high RMS and low MGR. They are strong competitors and cash generators in low-growth markets.






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