Business Environment
Exam Materials
Course Introduction
Business Environment explores the complex framework within which businesses operate, examining the various external and internal factors that influence organizational decision-making and success. This course covers economic, legal, political, social, technological, and global contexts, as well as ethical considerations and corporate social responsibility. Students will learn to analyze shifts in the marketplace, understand the impact of regulation and government policies, and assess competitive dynamics to navigate challenges and seize opportunities in an ever-changing business landscape.
Recommended Textbook
Business in Action 7th Edition by Courtland L. Bovee
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20 Chapters
2000 Verified Questions
2000 Flashcards
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Chapter 1: Developing a Business Mindset
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Sample Questions
Q1) The legal and regulatory environment would include ________.
A) demographic factors
B) technological innovations
C) the number of competitors in the market
D) preferences of the consumers
E) the speed of obtaining licenses
Answer: E
Q2) Compare and contrast the social environment and the economic environment of a business.
Answer: Social environment refers to the trends and forces in society at large.For instance,all companies are affected by population trends that change the composition of consumer markets and the workforce.
The economic environment of a business consists of the conditions and forces that (a)affect the cost and availability of goods,services,and labor and (b)thereby shape the behavior of buyers and sellers.For example,a growing economy can help companies by increasing demand and supporting higher prices for their products,but it can also raise the costs of labor and the materials the companies need to do business.
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3
Chapter 2: Understanding Basic Economics
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Sample Questions
Q1) Macroeconomics studies economic behavior among consumers,businesses,and industries that collectively determine the quantity of goods and services demanded and supplied at different prices.
A)True
B)False Answer: False
Q2) Deciding how much money to spend on new manufacturing equipment versus launching a new advertising campaign is described as opportunity cost.
A)True
B)False Answer: False
Q3) Leading economic indicators suggest changes that may happen in the economy in the future.
A)True
B)False Answer: True
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Page 4
Chapter 3: The Global Marketplace
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Sample Questions
Q1) The U.S.restricts the import of peanuts to a maximum of 1.7 million pounds per year to protect the price that domestic producers can charge.This is an example of a(n)________.
A) import subsidy
B) embargo
C) import quota
D) import tariff
E) restrictive import standard
Answer: C
Q2) Which of the following acts outlaws payments that are intended to get government officials to break the laws of their own countries or to secure "improper advantage" in gaining or retaining sales?
A) Mustering-out Payment Act
B) Export-Import Bank Act
C) Foreign Corrupt Practices Act
D) Special Payment Act
E) Federal Corrupt Practices Act
Answer: C
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Chapter 4: Business Ethics and Corporate Social Responsibility
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Sample Questions
Q1) Unlike general philanthropy,strategic CSR ________.
A) promotes an antagonistic business-versus-society mindset
B) leads to weakening of both the business and the society
C) refers to CSR activities that are mandatory according to law
D) is aimed at specific sections of the society that have been historically discriminated against E) is more likely to be sustained over time
Q2) Which of the following ethical approaches emphasizes desirable character traits such as integrity and compassion?
A) utilitarianism
B) Kantian ethics
C) deontological ethics
D) affirmative action
E) virtue
Q3) What is a conflict of interest? How is it related to ethical decision making?
Q4) Making a morally wrong decision is not the same thing as an ethical lapse.
A)True
B)False
Q6) Compare and contrast ethical lapse and ethical dilemma? Page 6
Q5) Compare and contrast discrimination and affirmative action.
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Page 7
Chapter 5: Forms of Ownership
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Sample Questions
Q1) Proxy is a document that authorizes another person to vote on behalf of a shareholder in a corporation.
A)True
B)False
Q2) RDS Bank has been making losses for many years now.The company's management wants to continue with the same style of operations,whereas many shareholders demand a change in management.A majority of shareholders unites and votes against the management's wish to sell the company to a larger counterpart subject to pressures from an external buyer.This is an example of a(n)________.
A) forced joint venture
B) hostile takeover
C) strategic alliance
D) majority merger
E) operational alliance
Q3) Unlimited liability is a legal condition under which any damages or debts incurred by a business are the owner's personal responsibility.
A)True
B)False
Q4) Compare and contrast sole proprietorships and general partnerships.
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Chapter 6: Entrepreneurship and Small Business Ownership
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Sample Questions
Q1) Unlike venture capitalists,angel investors tend to ________.
A) invest larger amounts of money in start-ups
B) remain involved with the company for a very short time
C) focus more on local opportunities
D) be investment specialists with an extremely focused and selective approach
E) invest mostly in high-potential areas
Q2) Small businesses can seek private financing in all of the following ways EXCEPT ________.
A) selling stocks and bonds
B) seeking angel investors
C) tapping personal savings
D) attracting venture capitalists
E) using credit cards and lines of credit
Q3) Which of the following is a business oriented service that helps business owners raise money to launch or expand companies?
A) CashKing
B) MoMoney
C) Kickstarter
D) Crowdfunder
E) StartUpDaddy
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Chapter 7: Management Roles, Functions, and Skills
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Sample Questions
Q1) Directly intervening in organizational processes to improve performance is an example of the ________ function of management.
A) communicating
B) controlling C) planning
D) organizing
E) decision making
Q2) Selecting an individual for employment from a pool of job applicants is an example of an interpersonal role of management.
A)True
B)False
Q3) First-line managers are those at the lowest level of the management hierarchy.
A)True
B)False
Q4) High-level managers rely heavily on subordinates to collect,analyze,and summarize information.
A)True
B)False
Q5) Briefly explain the four basic categories of management skills.
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Chapter 8: Organization and Teamwork
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Sample Questions
Q1) Groupthink occurs when ________.
A) managers favor employees who don't compete with their own particular strengths.
B) employees judge a decision by its eventual outcome, rather than on the quality of the decision at the time it was made.
C) peer pressures cause individual team members to withhold contrary or unpopular opinions.
D) a team places too much importance on one aspect of an event, which causes errors in accurately predicting the utility of a future outcome.
E) employees rely too heavily, or "anchor," on one trait or piece of information when making decisions about team members.
Q2) ________ is defined as a pathway for the flow of authority from one management level to the next.
A) Span of management
B) Span of control
C) Departmentalization
D) Network structure
E) Chain of command
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Chapter 9: Production Systems
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Sample Questions
Q1) The manufacturing approach in which part of the product is mass-produced and the remaining features are customized is known as ________.
A) batch-of-one production
B) mass production
C) customized production
D) mass manufacturing
E) mass customization
Q2) ________ refers to transferring a part or all of a business function to a facility in another country.
A) Offshoring
B) Scaling
C) Leveraging
D) Customization
E) External valuation
Q3) Scalability is the potential to increase production by expanding or replicating its initial production capacity.
A)True
B)False
Q4) Explain the significance of procurement in a business.
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Chapter 10: Employee Motivation
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Sample Questions
Q1) Engagement predicts the likelihood that employees will stay or leave their jobs.
A)True
B)False
Q2) Which of the following statements is TRUE regarding motivational strategies?
A) Managers should use micromanaging to motivate employees.
B) Managers should avoid personalizing motivational efforts.
C) Managers must address workplace problems and conflicts slowly.
D) Managers need to adapt motivational tactics to circumstances and special needs.
E) Managers should avoid letting employees choose which opportunities and rewards they want to pursue, as employees may not be capable of making the correct decisions.
Q3) The Hawthorne studies were simpler and less influential than suggested by the Hawthorne effect.
A)True
B)False
Q4) According to Maslow,higher-level needs can serve as motivators even if lower level needs are not yet met.
A)True
B)False
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Chapter 11: Human Resources Management
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Sample Questions
Q1) Compare and contrast retirement plans with pension plans.
Q2) Salary is paid by the unit of time or by the unit of output.
A)True
B)False
Q3) A ________ identifies key employees who are considered critical to the company's ongoing operations and lists potential replacements.
A) replacement chart
B) job specification
C) Pareto chart
D) depth chart
E) job analysis
Q4) Discuss the processes involved in training and developing employees.
Q5) Stock options grant employees the right to purchase a set number of shares of the employer's stock at a specific price,called the ________.
A) 401(k) plan
B) sliding-scale plan
C) convenience yield
D) exercise price
E) market price
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Chapter 12: Labor Relations
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Sample Questions
Q1) Craft unions offer membership to all workers who are involved in the manufacturing process of a product.
A)True
B)False
Q2) As an alternative to traditional labor unions,the ________ relies on union tactics (such as strikes and boycotts)without the legal force of unionized collective bargaining.
A) "dot.org" labor movement
B) "alt-labor" movement
C) "sans-union" movement
D) "hash-tag" labor movement
E) "progressive-labor" movement
Q3) A union insists that the organization must hire workers only if they are union members.This union is implementing a union shop.
A)True
B)False
Q4) Compare and contrast craft unions and industrial unions.
Q5) Explain the benefits of unionization.
Q6) What are unfair labor practices? Provide examples.
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Chapter 13: The Art and Science of Marketing
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Sample Questions
Q1) The basic distinction between wholesalers and retailers is that retailers sell to other companies whereas wholesalers sell to individual consumers.
A)True
B)False
Q2) Tension that exists when a person's beliefs don't match his or her behaviors is called ________.
A) cognitive dissonance
B) anchoring
C) hindsight bias
D) self-serving bias
E) fundamental attribution error
Q3) When a manufacturer combines fabric,buttons,and zippers to create clothing,it creates ________.
A) time utility
B) form utility
C) place utility
D) value utility
E) possession utility
Q4) Compare and contrast marketing concept with product and sales concept.
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Chapter 14: Product and Pricing Strategies
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Sample Questions
Q1) ________ is a method of setting prices based on customer perceptions of a product's worth.
A) Cost-based pricing
B) Optimal pricing
C) Skim pricing
D) Freemium pricing
E) Value-based pricing
Q2) Cost-based pricing ________.
A) uses a software to generate the ideal price for each item
B) introduces a new product at a very low price
C) is based on customer perceptions of cost
D) doesn't consider factors such as customer demand
E) uses a high price for a new product during the introductory stages
Q3) The maturity stage of product life cycle is ________.
A) a stage where a product's price is at a high level
B) usually the shortest stage in a product's lifetime
C) characterized by steep decline in profits
D) typically followed by a growth stage
E) a stage where firms have to win sales away from others
Q4) Compare and contrast co-branding and licensing.
Page 17
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Chapter 15: Distribution and Marketing Logistics
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Sample Questions
Q1) Hamilton Manufacturing Group manufactures stationary products such as various types of pens,papers,pencils,paper clips,etc.The firm tries to place a product in as many outlets as possible.Hamilton Manufacturing Group works with wholesalers and retailers of many types to ensure that their products have a wide market coverage.Hamilton Manufacturing Group uses which of the following strategies?
A) intensive distribution
B) selective distribution
C) multichannel retailing
D) exclusive distribution
E) disintermediation
Q2) Compare and contrast wholesalers with retailers.
Q3) Products vary widely in the amount of skilled support they may require before and after a sale.
A)True
B)False
Q4) Compare and contrast multichannel retailing with retail theater.
Q5) The coordinated use of multiple modes of transportation is known as warehousing.
A)True
B)False
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Chapter 16: Customer Communication
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Sample Questions
Q1) Compare and contrast the conventional promotion model with the new social model of customer communication.
Q2) In a canned sales pitch,the salesperson focuses on questioning and listening before offering a solution that meets each prospect's unique needs.
A)True
B)False
Q3) One significant advantage to using television for advertising is the ________.
A) entertainment carryover
B) high audience selectivity
C) long life for the message
D) short preparation time
E) low cost for production
Q4) The conventional promotion model differs from the new social model of customer communication in that the conventional promotion model ________.
A) tends to be interactive and conversational
B) tends to be bidirectional or multidirectional
C) tends to have a higher message frequency
D) focuses on collaboration with customers
E) tends to be intrusive and unidirectional
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Chapter 17: Financial Information and Accounting Concepts
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Sample Questions
Q1) Activity ratios analyze ________.
A) how well a company is making use of its assets
B) a firm's ability to pay its short-term obligations
C) a firm's ability to pay its long-term obligations
D) the leverage status of a company in question
E) the extent to which a business is financed by debt
Q2) Bookkeeping refers to ________.
A) the cost accounting component of accounting
B) analyzing financial information
C) preparing financial forecasts
D) the clerical aspect of accounting
E) performing profitability analysis for a company
Q3) Bookkeeping is the clerical function of recording the economic activities of a business.
A)True
B)False
Q4) What is GAAP?
Q5) Describe cost of goods sold and operating expenses.
Q6) Explain how private accountants function.
Q7) What is a balance sheet? Why is it called a balance sheet? Page 20
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Chapter 18: Financial Management
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Q1) Which of the following is a major advantage of raising funds through selling shares of ownership?
A) Selling shares to the public makes the company's operations less complicated.
B) It does not change the way a company is managed.
C) It consumes less time than other forms of financing.
D) It has tremendous potential to fuel organizational growth.
E) Owners do not risk their position in the firm when selling shares.
Q2) Which of the following sources of short-term debt is characterized by revolving credit terms?
A) unsecured loan
B) secured loan
C) trade credit
D) credit card
E) commercial paper
Q3) Which of the following is an internal source for obtaining funds for business?
A) issuing corporate bonds
B) unsecured loans
C) factoring
D) commercial papers
E) selling assets to obtain revenue
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Chapter 19: Financial Markets and Investment Strategies
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Sample Questions
Q1) Compare and contrast a money market and derivatives market.
Q2) No-load funds are mutual funds that ________.
A) do not charge sales commission
B) offer high rates of interest
C) offer low rates of interest
D) do not invest in equity shares
E) offer huge tax benefits to investors
Q3) A stock split is performed if a company's management team believes that the firm's shares are undervalued.
A)True
B)False
Q4) Explain the advantages and disadvantages of investing in mutual funds rather than in individual stocks.
Q5) Portfolio diversification is performed to ________.
A) protect against significant declines in any one vehicle
B) maximize the returns from any one vehicle
C) reduce the load that intermediaries charge
D) maximize the earning potential of a portfolio
E) maximize the earning potential of an investment vehicle
Q6) Compare and contrast blue chip,income,growth and cyclical stocks.
Page 23
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Chapter 20: The Money Supply and Banking Systems
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Sample Questions
Q1) Loan-to-value (LTV)is commonly defined as the amount of a loan relative to a house's assessed value.
A)True
B)False
Q2) The Dodd-Frank Act includes the Volker rule,which ________.
A) makes sure consumers get clear and accurate information about financial services
B) aims to stop banks from making risky trades that undermine their financial stability and put their customers at risk
C) seeks to prevent government bailouts of individual firms
D) provides for more rigorous rules regarding transparency and accountability of credit rating practices
E) aims to provide more transparency and accountability in the market for derivatives, hedge funds, and other financial products
Q3) Compare and contrast independent mortgage companies and mortgage brokers.
Q4) Compare and contrast retail banks and merchant banks.
Q5) What is money? What are its four financial functions?
Q6) What is a bubble?
Q7) Compare and contrast a liquidity crisis and a credit freeze.
Page 24
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