IIA-CIA-PART4 Exam Questions and Answers

QUESTION: 86

At the introduction stage of an innovative product, the profit growth is normally slow due to

Expensive sales promotion.
High competition.
A mass market.
Available alternatives.

Answer(s): A

Explanation:

The introduction stage is characterized by slow sales growth and lack of profits because of the high expenses of promotion and selective distribution to generate awareness of the product and encourage customers to try it. Thus, the per-customer cost is high. Competitors are few, basic versions of the product are produced, and higher-income customers (innovators) are usually targeted. Cost-plus prices are charged. They may initially be high to permit cost recovery when unit sales are low. The strategy is to infiltrate the market, plan for financing to cope with losses, build supplier relations, increase production and marketing efforts, and plan for competition.

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QUESTION: 87

While auditing a marketing department, the internal auditor discovered that the product life cycle model was used to structure the marketing mix. Under such a philosophy, the price charged on a consistent basis for a specific product would probably be lowest during which life cycle stage?

Introduction stage.
Growth stage.
Maturity stage.
Decline stage.

Answer(s): C

Explanation:

During the maturity stage, competition is at its greatest and costs are at their lowest. Moreover, firms are engaged in competitive price-cutting measures, resulting in some of the lowest prices seen during a product's life cycle.

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QUESTION: 88

While auditing a marketing department, the internal auditor discovered that the product life cycle model was used to structure the marketing mix. Under such a philosophy, the opportunity for cost reductions would be greatest in which stage of the life cycle?

Introduction stage.
Growth stage.
Maturity stage.
Decline stage.

Answer(s): B

Explanation:

During the growth stage, the opportunity for cost reductions is at its maximum because production volume is increasing at a high rate. Thus, fixed costs are being spread over more units of production, and the benefits of the learning curve are being realized.

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QUESTION: 89

While auditing a marketing department, the internal auditor discovered that the product life cycle model was used to structure the marketing mix. The manager has asked the auditor for advice about increasing advertising of various products. During which stage of the life cycle would it be appropriate to advertise that the company's product is the lowest price and best quality of all competitors?

Introduction stage.
Growth stage.
Maturity stage.
Decline stage.

Answer(s): C

Explanation:

The maturity stage is the ideal time for advertising lower prices and superior quality because this is the period during a product's life when competition is greatest. Due to the availability of many substitutes, a firm has reasons to set itself apart. Because price and quality are both concerns of customers during the maturity stage, it is an ideal time for the firm to differentiate its product by advertising low prices and higher quality.

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QUESTION: 90

According to Michael E Porter, evolutionary processes involving both internal and external factors operate to move an industry from its initial structure to its potential structure. A likely structural effect of the major evolutionary processes is that:

Expansion of industry scale will discourage entry by large firms.
Sellers' industries tend to become less concentrated as customers' industries become more concentrated.
Learning by buyers who become more sophisticated increases product differentiation.
Diffusion of proprietary knowledge will tend to reduce entry barriers.

Answer(s): D

Explanation:

Diffusion of proprietary knowledge may result from reverse engineering (a form of imitation) or another form of competitive intelligence (e.g., that obtained from suppliers, distributors, or customers), expiration of patents, purchase, migration of personnel to new firms, and spinoffs of operating segments. Thus, because barriers created by proprietary knowledge and specialized personnel tend to disappear, new competitors may emerge, and vertical integration becomes more likely. However, if further technological advances are feasible, economies of scale in R&D may create a protective barrier against new competition. The problem of diffusion may be met by creation of a substantial capacity to develop new proprietary knowledge.

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IIA IIA-CIA-PART4 Exam (page: 18) IIA Certified Internal Auditor - Part 4, Business Management Skills Updated on: 15-Feb-2026

QUESTION: 86

Explanation:

QUESTION: 87

Explanation:

QUESTION: 88

Explanation:

QUESTION: 89

Explanation:

QUESTION: 90

Explanation:

IIA IIA-CIA-PART4 Exam (page: 18)
IIA Certified Internal Auditor - Part 4, Business Management Skills
Updated on: 15-Feb-2026