Question 1

An external audit focuses on identifying and evaluating trends and events within the control of management.

Accepted Answer

An external audit focuses on evaluating an organization's financial statements and internal controls to provide an independent opinion to stakeholders. It is not concerned with trends and events within management's control, which is the focus of internal audits.

Question 2

Research findings suggest that a greater percentage of a firm's profitability can be explained by the industry than can be explained by the firm's internal factors.

Accepted Answer

Research findings generally suggest that a firm's internal factors have a greater impact on profitability than industry factors.

Question 3

An increase in interest rates is directly related to an increase in discretionary income and an increase in the demand for discretionary goods.

Accepted Answer

An increase in interest rates leads to a decrease in discretionary income as consumers have to spend more on interest payments. This decrease in discretionary income often leads to a decrease in the demand for discretionary goods.

Question 4

It is predicted that, by 2025, over 18% of the population in the United States will be over 65 years old.

Accepted Answer

According to the U.S. Census Bureau, the projected percentage of Americans aged 65 and older in 2025 is 18.8%. Therefore, the statement is true.

Question 5

Motor vehicle firms in the United States are vulnerable when the value of the dollar falls.

Accepted Answer

The answer of Motor vehicle firms in the United States...

Question 6

An economic trend in America is the increasing numbers of two-income households.

Accepted Answer

According to the U.S. Bureau of Labor Statistics, in 2019, 61.9% of married-couple families had both spouses employed. This indicates an increasing trend of two-income households in America.

Question 7

Freund argues that key external factors must not be hierarchical.

Accepted Answer

The answer of Freund argues that key external factors must...

Question 8

A low value of the dollar means lower exports and higher imports.

Accepted Answer

The answer of A low value of the dollar means...

Question 9

An advantage of adopting the Euro is the ability of the country to fix its own interest rate

Accepted Answer

Adopting the Euro means that a country would have to give up control over its interest rate, as the European Central Bank (ECB) sets the interest rates for all Eurozone countries.

Question 10

External audits attempt to identify key variables that offer actionable responses.

Accepted Answer

External audits are conducted to identify key variables that may affect an organization's performance and to provide actionable recommendations for improvement.

Question 11

Economic factors do not have much impact on the attractiveness of strategies.

Accepted Answer

Economic factors, such as market trends, industry growth, and consumer behavior, can greatly influence the attractiveness and success of business strategies. For example, a strategy that depends on luxury spending might be less attractive during an economic downturn when consumer spending is lower. Similarly, a strategy that relies on exports may be negatively affected by currency fluctuations or trade policies.

Question 12

The aim of an external audit is to develop an exhaustive list of every possible factor that could influence the business.

Accepted Answer

The aim of an external audit is to identify and evaluate external factors that could impact the business, but not necessarily every possible factor. It is not practical or necessary to consider every single factor, but rather to focus on the most significant ones.

Question 13

The average age of the residents in Maine makes it one of the five youngest states.

Accepted Answer

According to the United States Census Bureau's 2019 estimates, Maine has the oldest median age in the country, making it one of the five oldest states.

Question 14

Industry analysis is also referred to as external strategic management audit.

Accepted Answer

Industry analysis is a tool used in external strategic management audit to assess the external environment in which a business operates.

Question 15

The average age of the residents in Texas makes it one of the five youngest states

Accepted Answer

According to the United States Census Bureau's estimates as of 2020, the median age of Texas residents is 34.8 years old, which makes it one of the five youngest states in the US.

Question 16

The United States is getting older and less Caucasian.

Accepted Answer

According to the US Census Bureau, the population is becoming increasingly diverse with a higher number of seniors as the baby boomer generation ages.

Question 17

As many managers and employees as possible should be involved in the process of performing an external audit.

Accepted Answer

Involving as many managers and employees as possible can provide a broader understanding of the organization's operations and help identify areas for improvement.

Question 18

Nevada has the highest percentage of minority residents.

Accepted Answer

According to the United States Census Bureau, as of 2019, Nevada has a minority population of 52.7%, the highest percentage in the country.

Question 19

To perform an external audit, a company first must gather competitive intelligence and information about social, cultural, demographic, environmental, economic, political, legal, governmental and technological trends.

Accepted Answer

This statement is true as gathering information about these factors is essential for conducting an external audit.

Question 20

Five major categories of external variables are: 1) economic forces, 2) social and cultural forces, 3) political, governmental and legal forces, 4) technological forces and 5) demographic forces.

Accepted Answer

The answer of Five major categories of external variables are:...

Quiz 3: The External Assessment