IIA IIA-CIA-PART4 Exam (page: 13)
IIA Certified Internal Auditor - Part 4, Business Management Skills
Updated on: 15-Feb-2026

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The General Electric (GE) portfolio model for competitive analysis of strategic business units (SBUs) should be compared with the Boston Consulting Croup's growth-share matrix.
The GE model:

  1. Is a matrix with two variables:relative market share and market growth rate.
  2. Calculates an index for each of its two variables.
  3. Considers such factors for business strength as market size, growth rate, and price levels.
  4. Considers such factors for market attractiveness as market share, growth rate, and marketing skills.

Answer(s): B

Explanation:

The GE model is a multifactor portfolio matrix with two variables. Business strength or competitive position (BUS) is on one axis, and market attractiveness (MAT) is on the other. BUS is classified as strong, medium, or weak, and MAT is classified as high, medium, or low. Thus, the matrix in this model is 3 x 3 and has nine cells. SBUs are shown in the matrix as circles. Circle size is directly proportional to the size of the related market, with a shaded portion in the circle that represents the SBU's market share. To measure BUS and MAT, the firm must isolate the multiple factors affecting each, quantify them, and create an index. Factors will vary with each business. The measurements will provide the values on the axes of the matrix.



General Electric (GE) portfolio model for competitive analysis of strategic business units (SBUs) is presented in a matrix format. This matrix

  1. Has four quadrants.
  2. Shows SBUs as circles directly proportional to their business strength.
  3. Classifies its cells into nine zones.
  4. Classifies each variable in one of three categories.

Answer(s): D

Explanation:

The GE model is a multifactor portfolio matrix with two variables. Business strength or competitive position (BUS) is on one axis, and market attractiveness (MAT) is on the other. BUS is classified as strong, medium, or weak, and MAT is classified as high, medium, or low. Thus, the matrix in this model is 3 x 3 and has nine cells.



According to the Boston Consulting Group's portfolio model for competitive analysis, the strategy fora strong cash cow should be

  1. Harvest.
  2. Divest.
  3. Hold.
  4. Build.

Answer(s): C

Explanation:

A hold strategy is used for strong cash cows. It is necessary if the business is to continue to generate large net cash inflows. Harvesting might impair a strong cash cow's ability to generate long-term positive net cash inflows.



General Electric has popularized a model for competitive analysis. In this portfolio matrix,

  1. Each of the firm's businesses is represented by a circle proportional to its size.
  2. Business strength and market attractiveness are measured using a multifactor index.
  3. The number of cells varies with the number of factors used by the firm in its analysis.
  4. The four quadrants represent combinations of high or low market growth rates and business profitability.

Answer(s): B

Explanation:

The GE model is a multifactor portfolio matrix with two variables. Business strength or competitive position (BUS) is on one axis, and market attractiveness (MAT) is on the other. To measure BUS and MAT, the firm must isolate the multiple factors affecting each, quantify them, and create an index. Factors will vary with each business. The measurements will provide the values on the exes of the matrix.



When firms compete in different geographical locations or have multiple product lines that do not necessarily overlap, the most effective way of responding to an aggressive move by a competitor without directly triggering destructive moves and countermoves is to

  1. Mislead the competitor into taking or not taking an action.
  2. Make a prior announcement of intended moves.
  3. Initiate a move in the market where the competitor is strong.
  4. Initiate direct aggressive moves

Answer(s): C

Explanation:

Initiating a move in the market where the competitor is strong is a cross- parry. A cross- parry is an effective way to signal displeasure and raise the threat of more serious retribution without directly triggering destructive moves and countermoves.



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