Understanding External Audit and Forces
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Questions and Answers

What is the primary aim of an external audit?

  • To assess employee performance within the firm
  • To create financial reports for stakeholders
  • To enhance internal communication among departments
  • To identify key variables for actionable responses (correct)

    • Which category does not belong in the five broad categories of external forces?

  • Economic forces
  • Technological forces
  • Internal process forces (correct)
  • Competitive forces

    • Which of the following is a key factor in the AQCD test for external factors?

  • Global relevance
  • Simplicity
  • Actionability (correct)
  • Predictability

    • What does SCDE stand for in relation to external forces?

    <p>Social, Cultural, Demographic, and Environmental forces</p> Signup and view all the answers

    Which of the following economic indicators is likely to impact strategic decisions the most?

    <p>Consumer disposable income levels</p> Signup and view all the answers

    Which of these external forces is primarily concerned with government policies?

    <p>Political, governmental, and legal forces</p> Signup and view all the answers

    What is the significance of the shift to a service economy in terms of external audit?

    <p>It requires a reevaluation of customer engagement strategies.</p> Signup and view all the answers

    Which of the following statements about the AQCD test is accurate?

    <p>AQCD stands for Actionable, Quantitative, Comparative, and Divisional.</p> Signup and view all the answers

    What is the weight assigned to the threat of increasing county and city property taxes?

    <p>0.08</p> Signup and view all the answers

    Which factor received the highest rating for threatening the cinema complex's revenue?

    <p>Trend toward healthy eating eroding concession sales</p> Signup and view all the answers

    Based on the Competitive Profile Matrix, what general trend does a total weighted score of 2.20 indicate for Company 3?

    <p>It is performing worst among the analyzed companies.</p> Signup and view all the answers

    How much did the demand for online movies and DVDs grow according to the threats identified?

    <p>10%</p> Signup and view all the answers

    What is the total weighted score calculated for the key external factors affecting the cinema complex?

    <p>2.58</p> Signup and view all the answers

    Which variable specifically pertains to population changes affecting societal structure?

    <p>Immigration and emigration rates</p> Signup and view all the answers

    What is the focus of competitive intelligence?

    <p>Gathering information about competitors</p> Signup and view all the answers

    Which legal variable may significantly influence organizational strategy?

    <p>Natural environmental regulations</p> Signup and view all the answers

    What is one of the major technological threats identified in the content?

    <p>Emergence of AI</p> Signup and view all the answers

    What condition contributes to high rivalry among competing firms?

    <p>Common price cuts in the industry</p> Signup and view all the answers

    Which of the following best describes the role of a Chief Information Officer (CIO)?

    <p>Ensuring information availability for strategic planning</p> Signup and view all the answers

    What aspect is NOT considered part of competitive forces?

    <p>Understanding employee morale</p> Signup and view all the answers

    Which factor does NOT contribute to barriers to entry in an industry?

    <p>Minimal capital requirements</p> Signup and view all the answers

    Which of the following is a method of obtaining competitive intelligence?

    <p>Reverse-engineering competitor products</p> Signup and view all the answers

    In what situation would the bargaining power of consumers be considered high?

    <p>Consumers can switch products at minimal cost</p> Signup and view all the answers

    How might local, state, and federal laws impact an organization?

    <p>By influencing strategic decisions and compliance</p> Signup and view all the answers

    What effect does a decrease in the price of substitute products have on competition?

    <p>It increases competition by encouraging consumers to switch.</p> Signup and view all the answers

    Which barrier to entry is related to gaining economies of scale?

    <p>Large capital requirements</p> Signup and view all the answers

    What is a primary concern regarding immigration and emigration rates?

    <p>Population dynamics and societal change</p> Signup and view all the answers

    Which question about competitors addresses the potential for a counterattack?

    <p>How vulnerable is our firm to successful counterattack by our major competitors?</p> Signup and view all the answers

    Which condition leads to a decrease in the bargaining power of suppliers?

    <p>Many suppliers available</p> Signup and view all the answers

    What is a common reason for high rivalry among firms in an industry?

    <p>High fixed costs among competitors</p> Signup and view all the answers

    Which factor is NOT a technological force that can affect strategic planning?

    <p>Financial incentives</p> Signup and view all the answers

    What is a characteristic of social responsibility issues?

    <p>They incorporate company reputation and ethics.</p> Signup and view all the answers

    What factor is NOT a condition where consumers gain bargaining power?

    <p>Sellers are thriving due to high demand</p> Signup and view all the answers

    Which scenario would most likely increase a firm's bargaining power over its suppliers?

    <p>The firm uses multiple raw material sources.</p> Signup and view all the answers

    Which of the following influences consumer behavior significantly?

    <p>Attitudes toward product quality</p> Signup and view all the answers

    Which of the following conditions increases the threat of new competitors entering an industry?

    <p>Low capital investment required to enter the market</p> Signup and view all the answers

    What aspect of the Five-Forces Model deals with determining if entry into an industry is advantageous?

    <p>Deciding collective strength of forces</p> Signup and view all the answers

    How does consumer awareness of product features affect competition?

    <p>It increases competition as consumers seek the best value.</p> Signup and view all the answers

    What is a key factor that makes substitute products more threatening?

    <p>Increasing prices of current industry products</p> Signup and view all the answers

    Which external factor is NOT typically included in the External Factor Evaluation (EFE) Matrix?

    <p>Internal company policies</p> Signup and view all the answers

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