Understanding External Audit and Forces

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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?

Social, Cultural, Demographic, and Environmental forces (C) Signup and view all the answers

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

Consumer disposable income levels (C) Signup and view all the answers

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

Political, governmental, and legal forces (C) Signup and view all the answers

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

It requires a reevaluation of customer engagement strategies. (C) Signup and view all the answers

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

AQCD stands for Actionable, Quantitative, Comparative, and Divisional. (A) Signup and view all the answers

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

0.08 (D) Signup and view all the answers

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

Trend toward healthy eating eroding concession sales (B) 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?

It is performing worst among the analyzed companies. (B) Signup and view all the answers

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

10% (C) Signup and view all the answers

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

2.58 (B) Signup and view all the answers

Which variable specifically pertains to population changes affecting societal structure?

Immigration and emigration rates (B) Signup and view all the answers

What is the focus of competitive intelligence?

Gathering information about competitors (C) Signup and view all the answers

Which legal variable may significantly influence organizational strategy?

Natural environmental regulations (A) Signup and view all the answers

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

Emergence of AI (B) Signup and view all the answers

What condition contributes to high rivalry among competing firms?

Common price cuts in the industry (A) Signup and view all the answers

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

Ensuring information availability for strategic planning (D) Signup and view all the answers

What aspect is NOT considered part of competitive forces?

Understanding employee morale (C) Signup and view all the answers

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

Minimal capital requirements (C) Signup and view all the answers

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

Reverse-engineering competitor products (A) Signup and view all the answers

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

Consumers can switch products at minimal cost (C) Signup and view all the answers

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

By influencing strategic decisions and compliance (B) Signup and view all the answers

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

It increases competition by encouraging consumers to switch. (C) Signup and view all the answers

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

Large capital requirements (D) Signup and view all the answers

What is a primary concern regarding immigration and emigration rates?

Population dynamics and societal change (B) Signup and view all the answers

Which question about competitors addresses the potential for a counterattack?

How vulnerable is our firm to successful counterattack by our major competitors? (C) Signup and view all the answers

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

Many suppliers available (D) Signup and view all the answers

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

High fixed costs among competitors (D) Signup and view all the answers

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

Financial incentives (D) Signup and view all the answers

What is a characteristic of social responsibility issues?

They incorporate company reputation and ethics. (D) Signup and view all the answers

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

Sellers are thriving due to high demand (D) Signup and view all the answers

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

The firm uses multiple raw material sources. (A) Signup and view all the answers

Which of the following influences consumer behavior significantly?

Attitudes toward product quality (D) Signup and view all the answers

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

Low capital investment required to enter the market (B) Signup and view all the answers

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

Deciding collective strength of forces (D) Signup and view all the answers

How does consumer awareness of product features affect competition?

It increases competition as consumers seek the best value. (A) Signup and view all the answers

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

Increasing prices of current industry products (B) Signup and view all the answers

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

Internal company policies (B) Signup and view all the answers

External Audit

Analysis of trends and events outside a company, identifying opportunities and threats.

External Forces

Factors outside a company that affect its strategies, including economic, social, political, technological, and competitive.

Economic Forces

External factors like interest rates, inflation, and GDP impacting a company.

AQCD Test

A method for assessing the quality of external factors in strategic planning, focusing on Actionable, Quantitative, Comparative, and Divisional aspects.