Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 22

Which of the following is a limiting factor for capacity expansion?

Answer options

• A. Government pressure on organizations to increase or maintain employment.
• B. Production orientation of management.
• C. Lack of credible market leader in the industry.
• D. Company diversification.

Correct answer: D

Explanation

Company diversification can limit capacity expansion because it may spread resources too thin and divert focus from core operations. The other options, while potentially impactful, do not directly constrain the ability to expand capacity in the same way that diversification does.