Business Environment
Exam Bank
Course Introduction
Business Environment explores the various internal and external factors that influence the operations and success of organizations. This course examines economic, legal, political, social, and technological elements shaping business activities in both domestic and global contexts. Topics include market structures, regulatory frameworks, ethical considerations, cultural influences, and environmental forces. By analyzing dynamic business environments, students gain insights into strategic decision-making and learn to anticipate and adapt to changes that impact businesses across industries.
Recommended Textbook
BUSN 9th Edition by Marcella Kelly
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Chapter 1: Business
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Q1) In the context of factors of production, which of the following is an example of a natural resource?
A)An equipment
B)Land
C)An investment
D)Information
Answer: B
Q2) _________ is the quality and quantity of goods and services available to a population.
A)Standard of living
B)Quality of working life
C)Social mobility
D)Speed-to-market
Answer: A
Q3) In the context of making business personal, following one's passion doesn't guarantee a fat paycheck, but it does boost one's chances of both financial and personal success.
A)True
B)False Answer: True
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Chapter 2: Economics: The Framework for Business
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Q1) The Fed requires that all of its member banks hold funds called "reserves," equal to a stated percentage of the deposits held by their customers. This percentage is called the reserve requirement.
A)True
B)False
Answer: True
Q2) The $700 billion economic bailout plan following the subprime mortgage crisis of 2008 was called the _____.
A)American Recovery and Reinvestment Act
B)Troubled Assets Relief Program
C)Clayton Antitrust Act
D)NCUA Corporate Stabilization Program
Answer: B
Q3) If spending is lower than revenue, the government incurs a budget deficit and must borrow money to cover the shortfall.
A)True
B)False
Answer: False
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Chapter 3: The World Marketplace: Business Without Borders
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Q1) Compared to the U.S., China and India have:
A)smaller market size.
B)higher GDP growth rates.
C)higher per capita GDPs.
D)limited market potential.
Answer: B
Q2) Which of the following is true of a partnership?
A)It is the most expensive form of direct investment.
B)It is a formal, long-term agreement.
C)It is the most basic level of global trade.
D)It is otherwise known as domestic franchising.
Answer: B
Q3) In the context of barriers to international trade, which of the following is an example of energy infrastructure in a country?
A)Railroads
B)Cell phone coverage
C)Power plants
D)Radio
Answer: C
Page 5
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Chapter 4: Business Ethics and Social Responsibility: Doing
Well by Doing Good
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Q1) Which of the following is true in the context of the steps that need to be taken by top managers in executing the integrated approach to the implementation of a code of ethics in an organization?
A)They should ensure that the company's ethics code is both local and global in scope.
B)They should ensure that they do not overcommunicate the importance of ethics.
C)They should separate the ethics training given to employees from mandatory staff training.
D)They should enforce strict laws and penalties against whistleblowers in the organization.
Q2) Consumerism is a widely accepted social movement. Proponents of this movement believe that _____ is a right of all consumers.
A)the right to the lowest price
B)the right to purchase an extended warranty
C)the right to be informed
D)the right to return a product in seven days for a full refund
Q3) Explain how globalization impacts social responsibility.
Q4) How do businesses around the globe monitor ethics and social responsibility?
Q5) Define and describe social responsibility.
Page 6
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Chapter 5: Business Communication: Creating and Delivering Messages that Matter
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Q1) Communication must be static rather than dynamic.
A)True
B)False
Q2) In the context of communication barriers, _________ include everything from how you greet colleagues and establish eye contact to how you handle disagreement, eat business meals, and make small talk at meetings.
A)perceptual barriers
B)cultural barriers
C)physical barriers
D)organizational barriers
Q3) An email should be lengthy and should have as many attachments as possible to communicate a message.
A)True
B)False
Q4) Identify a true statement about dynamic delivery.
A)It is a natural skill for everyone.
B)It is ineffective when done among friends or in front of a mirror.
C)It begins and ends with preparation.
D)It is a nonvibrant form of presentation delivery.
7
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Chapter 6: Business Formation: Choosing the Form that Fits
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Q1) Mention the advantages and limitations of nonprofit (or not-for-profit)corporations.
Q2) A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.
A)business format franchise
B)conglomerate merger
C)distributorship
D)divestiture
Q3) List and describe any two forms of business ownership.
Q4) Which of the following is a difference between a C corporation and an S corporation?
A)The members of a C corporation have unlimited liability, whereas the members of an S corporation enjoy limited liability.
B)The members of a C corporation have limited liability, whereas the members of an S corporation have unlimited liability.
C)A C corporation is double taxed, whereas an S corporation is taxed as a partnership.
D)A C corporation is taxed as a partnership, whereas an S corporation is double taxed.
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Chapter 7: Small Business and Entrepreneurship: Economic
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Q1) Identify the core questions a business plan should address.
Q2) Which of the following bodies assists entrepreneurs by guaranteeing loans from local commercial lenders?
A)The Federal Reserve
B)The Patent and Trademark Office
C)The Small Business Administration
D)The Department of the Treasury
Q3) Which of the following is a powerful contribution made by small businesses to the U.S. economy?
A)Vitalizing rural towns
B)Powering the stock market
C)Vitalizing inner cities
D)Accounting for all private sector output
Q4) In the context of the U.S. economy, small businesses:
A)do not create a significant percentage of new jobs.
B)contribute to a very small percentage of the gross domestic product.
C)are often the first to contract when times are tough.
D)have an insignificant impact on the state of the economy.
Q5) Describe two basic qualities that define successful entrepreneurs.
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Chapter 8: Accounting: Decision Making by the Numbers
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Q1) Betty's job entails detecting problems such as embezzlement, waste, mismanagement, and employee theft at her organization. In this case, Betty is a(n)_____.
A)management consultant
B)government accountant
C)internal auditor
D)certified public accountant
Q2) In order to preserve independence and impartiality, Financial Accounting Standards Board (FASB)members are required to:
A)serve the board for the rest of their lives once they are appointed.
B)sever all ties with any firms or institutions they served prior to joining the board.
C)sign a non-disclosure agreement and hand over all information of their previous companies to the board.
D)pass a rigorous two-day, four-part examination on major accounting concepts.
Q3) What is the accounting equation? Define each term in the equation.
Q4) Describe the role of the Financial Accounting Standards Board (FASB).
Q5) Liabilities do not include bank loans and current payments owed to suppliers.
A)True
B)False
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Chapter 9: Finance: Acquiring and Using Funds to Maximize
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Q1) In financial management, risk is referred to as the:
A)environmental factors that may affect a business adversely.
B)internal factors that may disrupt the smooth functioning of a company.
C)degree of uncertainty about the actual outcome of a decision.
D)various strategies implemented by managers to increase returns.
Q2) When customers of an equipment manufacturing unit buy equipment on credit and then delay making payments, they receive a bill from a collection agency. What relationship does the collection agency have with the manufacturer?
A)Trade credit
B)Revolving credit agreement
C)Factoring
D)Short-term bank loans
Q3) What role does a factor play in providing short-term financing to a firm? Why would firms that rely heavily on credit sales find factoring attractive?
Q4) Projects with the potential for high returns generally have a low degree of uncertainty and risk.
A)True
B)False
Q5) Define the two primary sources of equity financing.
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Chapter 10: Financial Markets: Allocating Financial Resources
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Q1) Investors who use analytical techniques to try to predict when prices of particular stocks are likely to rise and fall are relying on the _________ strategy.
A)market timing
B)buy-and-hold
C)market making
D)value investing
Q2) A _________ is the most common depository institution.
A)not-for-profit organization
B)savings and loan association
C)credit union
D)commercial bank
Q3) _________ overturned the section of the Banking Act of 1933 that prohibited commercial banks from selling insurance or performing the functions of investment banks.
A)The Sarbanes-Oxley Act of 2002
B)The Securities and Exchange Act of 1934
C)The Financial Services Modernization Act of 1999
D)The Securities Act of 1933
Q4) Discuss how the government regulates securities markets.
Page 12
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Chapter 11: Marketing: Building Profitable Customer
Connections
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Q1) Through the use of technology, marketers can lower costs and deliver greater value to their constomers.
A)True
B)False
Q2) Clyde wants to open a new store in his neighborhood but needs to first collect relevant data.A cost-effective way to start his research is by:
A)relying exclusively on primary data collection because it can be customized to ensure relevance.
B)collecting secondary data to narrow the list of possible locations, then use the results to focus primary research efforts on a limited number of possible locations.
C)relying solely on secondary data, even if it is insufficient. This allows the firm to free up both time and financial resources for the design and development of the actual store.
D)collecting primary data. Then, once the primary data is collected, use secondary sources to refine and verify the results.
Q3) In the context of the evolution of marketing, explain the marketing era.
Q4) Define consumer market segmentation and describe the four types of segments.
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Page 13
Chapter 12: Product and Promotion: Creating and Communicating Value
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Q1) The characteristics of a product that a marketer offers are known as _____.
A)product benefits
B)product features
C)product qualities
D)product visions
Q2) Crunch Lite produces six different flavors of sugar-free cookies for the diabetic population. The company also produces a large assortment of sugar-free chocolates targeted at the same population. The sugar-free cookies and chocolates that Crunch Lite produces represent the _____ of the company.
A)product chains
B)brand mixes
C)brand equity
D)product lines
Q3) Which of the following can enhance a product's diffusion rate in the market?
A)Enhancing the benefits of the product compared to existing ones
B)Diversifying the product from the existing ones
C)Enhancing the complexity level of the product compared to the existing ones
D)Selling the product without putting it on trial
Q4) What is promotion? Name and describe two major types of emerging promotional tools.
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Chapter 13: Distribution and Pricing: Right Product, Right
Person, Right Place, Right Price
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Q1) _____ involves hiring independent contractors to sell products to their personal network of friends and colleagues and to recruit new salespeople in return for a percentage of their commissions.
A)Multilevel marketing
B)Direct response retailing
C)Online retailing
D)Vending
Q2) Supply chain management is a subset of logistics and is only concerned with the movement of products from point A to point B.
A)True
B)False
Q3) One drawback of using distributors in a distribution channel is that the addition of intermediaries increases the total number of transactions that must occur to get the goods from the producer to the consumer.
A)True
B)False
Q4) Describe and compare the roles of retailers and wholesalers in a distribution channel.
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Chapter 14: Management, Motivation and Leadership: Bringing Business to Life
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Q1) List and describe the management skills needed to effectively manage today's workforce.
Q2) In the management hierarchy, _____ includes managers who set the overall direction of a firm, articulating a vision, establishing priorities, and allocating time, money, and other resources.
A)top management
B)middle management
C)first-line management
D)supervisory management
Q3) In the context of goal setting in an organization, the most effective strategic goals are:
A)independent of a time frame.
B)defined in general rather than specific terms.
C)easy to achieve.
D)defined in clear, numerical terms.
Q4) Douglas McGregor proposed that managers should use Theory Y assumptions:
A)to capitalize on the intelligence of the workers they supervise.
B)to instigate fear in employees.
C)to direct and supervise the workers who dislike work.
D)to identify workers who avoid responsibility and seek security.
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Chapter 15: Human Resources Management: Building a Top Quality Workforce
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Q1) Compare the advantages and disadvantages of internal and external recruitment methods.
Q2) Roy Stewart wants to be an electrician but knows that before he can be hired as a fully qualified electrician, he must assist an experienced electrician for a period of two years before gaining the credentials to work in the field.This type of arrangement is an example of an apprenticeship program.
A)True
B)False
Q3) Which of the following is an example of an internal recruitment method?
A)Trade associations
B)University employment centers
C)Promotions
D)Newspaper ads
Q4) Which of the following is a major challenge faced by most human resources departments?
A)Restrictions from top management in making strategic contributions
B)Inability to find the root cause of problems in most situations
C)Being considered irrelevant by many employees
D)Receiving less pay
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Chapter 16: Managing Information and Technology: Finding
New Ways to Learn and Link
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Q1) The two broad categories of software are:
A) text software and data software.
B)entertainment software and business software.
C)resident software and extrinsic software.
D)system software and application software.
Q2) Recently, Candice found it difficult to find legitimate email messages due to the hundreds of unsolicited commercial emails in her inbox. To prevent this from occurring in the future, Candice should install a _____.
A)spam filter
B)cyber net filter
C)pharming filter
D)spyware program
Q3) Firms create _____ by offering limited access to certain areas of their intranets to select groups of people.
A)open systems
B)expert systems
C)horizontally integrated networks
D)extranets
Q4) Compare and contrast intranets and extranets.
Page 18
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Chapter 17: Operations Management: Putting It All Together
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Q1) Which of the following is a characteristic of Six Sigma?
A)It exercises tight control on inventories of goods.
B)It aims to reduce defects to no more than 3.4 per million opportunities.
C)It focuses on the correction rather than the prevention of mistakes.
D)It lays emphasis on using green technologies for environmental protection.
Q2) Mr. Chase has opened a custom furniture business and is concerned about the costs associated with storing raw materials, machinery, and finished products. Mr. Chase should consider using a method of production known as just-in-time (JIT)production to help control his inventory costs.
A)True
B)False
Q3) The purpose of JIT (just-in-time)production is to:
A)sell more goods over time.
B)enhance product quality.
C)prevent errors in production.
D)keep inventories at a minimum.
Q4) Identify and describe key factors operations managers consider when choosing a location for a business facility.
Q5) How are leading firms trying to become "greener" in their approach?
Q6) Explain how technology has influenced operations management.
Page 19
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