Business Environment
Exam Preparation Guide
Course Introduction
Business Environment explores the dynamic interplay of internal and external factors that influence organizational operations and decision-making. This course examines economic, political, legal, technological, sociocultural, and global elements shaping the landscape in which businesses operate. Students will develop an understanding of how firms adapt strategies to respond to market trends, regulatory frameworks, competition, and societal expectations. Emphasis is placed on analyzing real-world cases to illustrate the impact of environmental changes on business strategy, sustainability, and performance, equipping students with the tools needed for effective management in a constantly evolving environment.
Recommended Textbook
Understanding Business 12th Edition by William G Nickels
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24 Chapters
7272 Verified Questions
7272 Flashcards
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Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment
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315 Verified Questions
315 Flashcards
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Sample Questions
Q1) Which of the following statements best describes how firms must treat their frontline workers in order to remain competitive? Frontline workers must be ________.
A) empowered with the authority to respond quickly to the unmet needs of customers
B) closely supervised to reduce the risk of product liability and discrimination lawsuits
C) eliminated and replaced with automated equipment whenever possible
D) relieved of any burden to make a customer decision
Answer: A
Q2) People living in San Francisco, CA, on average earn more money than people living in Kansas City, MO. The citizens of San Francisco enjoy a higher standard of living than the citizens of Kansas City.
A)True
B)False
Answer: False
Q3) The advice provided by a personal trainer is an example of the service industry.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Understanding Economics and How It Affects Business
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305 Verified Questions
305 Flashcards
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Sample Questions
Q1) Most communist countries today are suffering from severe economic problems.
A)True
B)False Answer: True
Q2) Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.
A)True
B)False Answer: False
Q3) In the U.S., the ________ has the role of managing the money supply and interest rates.
A) United States Treasury
B) Federal Reserve Bank
C) State Department
D) Federal Deposit Insurance Corporation
Answer: B
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Page 4
Chapter 3: Doing Business in Global Markets
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346 Verified Questions
346 Flashcards
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Sample Questions
Q1) One characteristic of an international joint venture is all parties sharing the risk of a major project.
A)True
B)False
Answer: True
Q2) A favorable balance of trade occurs when the value of a nation's exports exceeds its imports.
A)True
B)False
Answer: True
Q3) Sovereign wealth funds are investment funds controlled by governments that hold large stakes in foreign companies.
A)True
B)False
Answer: True
Q4) With respect to free trade, many American citizens prefer "fair trade, not free trade."
A)True
B)False Answer: True
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Chapter 4: Demanding Ethical and Socially Responsible Behavior
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257 Verified Questions
257 Flashcards
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Sample Questions
Q1) Insider trading occurs when employees of publicly traded companies use private company information to profit in the stock market.
A)True
B)False
Q2) Micah often takes longer lunch breaks than allowed. Melissa chooses to use her work computer to check out her personal Twitter account instead of using up her phone's data. Louis misrepresents his product to a potential customer. All of these are examples of unethical behavior.
A)True
B)False
Q3) Tobacco companies label their products with warnings of the potential health hazards that could occur from smoking. Due to the fact that this is a government-mandated disclosure, it is part of the industry's compliance-based ethics.
A)True
B)False
Q4) Provide examples that serve to explain the differences among the following terms: (1) corporate responsibility; (2) corporate social initiatives; (3) corporate philanthropy.
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Chapter 5: How to Form a Business
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342 Verified Questions
342 Flashcards
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Sample Questions
Q1) Franchisors give franchisees the right to use their name and product, with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.
A)True
B)False
Q2) When two of Mercedes's friends approached her about starting a business, Mercedes's was sure she did not want to risk any amount beyond her initial investment or be involved with the day-to-day management. However, she was willing to invest in the business. Mercedes's preferences suggest that she prefers a general partnership form of business ownership.
A)True
B)False
Q3) When two companies in the same industry agree to become one firm, the result is called a
A) vertical merger.
B) joint venture.
C) monopoly.
D) horizontal merger.
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Chapter 6: Entrepreneurship and Starting a Small Business
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303 Verified Questions
303 Flashcards
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Sample Questions
Q1) List and discuss at least three causes of small business failure.
Q2) Using the analogy of boulders vs. sand for filling a hole, the textbook points out that A) small businesses are employing a record number of employees because they have to work twice as hard at producing the same amount of output as a large competitor.
B) small businesses can serve niche markets that larger firms do not serve well.
C) the sand represents the small businesses that start and fail each year, while the boulders represent the large companies whose resources permit them to stay the course.
D) large companies serve market niches so much better than small companies.
Q3) Because of their greater financial resources and expert staffs, big corporations can almost always outperform small businesses.
A)True
B)False
Q4) Entrepreneurs are well advised to avoid starting businesses in the same market in which they were previously employed.
A)True
B)False
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Chapter 7: Management and Leadership
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281 Verified Questions
281 Flashcards
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Sample Questions
Q1) Moises has dreamed of setting up a graphic design company since he was in college. He always knew he wanted to work from home and he now had several leads for prospective customers. He also knew how much money he needed to make to cover his expenses. He had several ways to approach his new business including working by himself or taking on a partner. Both ways needed more thought to determine what each would involve. In terms of the rational decision-making model, Moises is in which of the following steps?
A) defining the situation
B) describing and collecting needed information
C) developing alternatives
D) determining if the decision was a good one
Q2) Phillip is a manager for Connect Cable. Most of his day is spent scheduling the specific service calls that each employee performs, verifying job completion, and evaluating employee performance on each call. These responsibilities suggest that Phillip is a middle manager.
A)True
B)False
Q3) Researchers have determined that all effective leaders have similar traits.
A)True
B)False
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Chapter 8: Structuring Organizations for Todays
Challenges
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364 Verified Questions
364 Flashcards
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Sample Questions
Q1) The matrix organization model brings together experts from different functional units of the firm to work on specific projects.
A)True
B)False
Q2) Which of the following is considered to be an advantage of functional departmentalization?
A) Employees begin to identify with their department and its goals rather than with the goals of the entire organization.
B) People in the same department tend to think very differently.
C) Departments are isolated from one another.
D) Employee skills can be developed in depth.
Q3) Max Weber's principles of organization were similar to those of Henri Fayol.
A)True
B)False
Q4) A virtual corporation refers to a permanent network of firms linked by high-tech communication systems.
A)True
B)False
Page 10
Q5) Discuss Max Weber's views on organization theory.
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Chapter 9: Production and Operations Management
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321 Verified Questions
321 Flashcards
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Sample Questions
Q1) Which of the following is an important part of operations management?
A) determining the best means of financing the firm's operations
B) developing the best advertising strategy to promote a firm's products
C) deciding whether to pay a dividend to the firm's stockholders
D) choosing the best location for a firm's facilities
Q2) Mass customization is a strategy of convincing customers to choose from a relatively small number of alternatives in order to achieve the efficiencies of mass production.
A)True
B)False
Q3) With the ________ inventory control system, producers hold only the amount of materials and parts that they need for a short period of time, sometimes just a few hours.
A) ABC
B) first-in, first-out (FIFO)
C) just-in-time (JIT)
D) maximum
Q4) One way to compete with cheap labor is to use robots.
A)True
B)False
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Chapter 10: Motivating Employees
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357 Flashcards
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Sample Questions
Q1) In Silicon Valley, California, it is not unusual for highly skilled employees to stay at one company for about three years. These specialized employees have a mind-set for rapid promotion. They believe that they have only themselves to blame if these high goals are not met. William Ouchi would categorize the management style that these employees operate under as
A) Type A.
B) Type B.
C) Type J.
D) Type Z.
Q2) Management at the local Leaves of Green restaurant is trying to improve task efficiency by breaking down jobs into simple steps and assigning each step to a different worker. The key benefit of this approach is that it is one of the most effective ways to achieve job enrichment.
A)True
B)False
Q3) The best way for U.S. firms to become more competitive is to adopt the Type J approach to management.
A)True
B)False
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Page 12
Chapter 11: Human Resource Management: Finding and
Keeping the Best Employees
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423 Verified Questions
423 Flashcards
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Sample Questions
Q1) According to the Need a Job? box in the text, one way to recruit employees is through social media.
A)True B)False
Q2) HR is focused on issues directly related to a person's job and with things that happen at work, as opposed to concerns that may affect one's work such as eldercare and childcare, but are not directly related to work.
A)True B)False
Q3) Essentially, the steps of the human resource plan require the HR professional to (1) take inventory of the type of workers (including the skills of the workers) that the business already has, in order to determine if it has the most up-to-date workforce for its needs; he/she then proceeds with (2) analyzing each job; (3) forecasting the firm's requirements for various job titles; and (4) making a determination of the future supply of skilled labor available to meet the demands of the business. Lastly, the HR professional (5) develops a human resource strategic plan.
A)True B)False
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Chapter 12: Dealing With Employeemanagement Issues
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297 Verified Questions
297 Flashcards
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Sample Questions
Q1) Today, women earn close to ________ of what men earn, though the disparity varies considerably by profession and the level of education.
A) 25%
B) 50%
C) 80%
D) 90%
Q2) The fact that workers sometimes serve on the board of directors of European companies helps explain why
A) European executives accept less responsibility for the successes and failures of the firms they lead.
B) European CEOs earn much less than American CEOs.
C) European firms are more likely to seek protection from foreign competition than American firms.
D) workers in Europe are less likely to believe unions are necessary than workers in the United States.
Q3) The largest labor organization in the U.S. is the National Education Association (NEA). A)True
B)False
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14
Chapter 13: Marketing: Helping Buyers Buy
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250 Verified Questions
250 Flashcards
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Sample Questions
Q1) Pham, after years working with the consumer market, has just been transferred into a new job dealing with buyers in the B2B market. Which of the following correctly identifies a key difference Pham will likely notice between consumer markets and B2B markets?
A) Businesses focus on developing wants and needs in consumer markets, while firms work to satisfy the existing needs of the B2B market.
B) Relationship marketing tends to be much more important in consumer markets than in the business-to-business markets.
C) Buyers in the business-to-business markets tend to be more rational than buyers in consumer markets.
D) Business-to-business markets make greater use of marketing intermediaries such as wholesalers and retailers than do consumer markets.
Q2) During the selling era, businesses turned from an emphasis on production to an emphasis on selling.
A)True
B)False
Q3) Identify and discuss the four eras of the evolution of marketing.
Q4) Describe the steps involved in the marketing process.
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Chapter 14: Developing and Pricing Goods and Services
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356 Verified Questions
356 Flashcards
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Sample Questions
Q1) A trademark is a brand that has been given exclusive legal protection for both the brand name and the pictorial design.
A)True
B)False
Q2) Price, appearance, and reputation can influence a consumer's perceptions of quality.
A)True
B)False
Q3) One way firms can gain a competitive advantage without relying on low prices is by developing close, friendly relationships with their customers.
A)True
B)False
Q4) Newport Industries is one of the first producers of a unique consumer product. The company has chosen a low-price strategy, hoping this will enable them to quickly attract many customers while discouraging potential competitors from entering the market. Newport's approach to pricing is a classic example of the skimming strategy.
A)True
B)False
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Page 16
Chapter 15: Distributing Products
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314 Verified Questions
314 Flashcards
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Sample Questions
Q1) Which type of wholesale organization would be most useful to a small manufacturer that has shipments that are too small to fill a truck or railcar?
A) rack jobbers
B) cash-and-carry wholesalers
C) piggy-backers
D) freight forwarders
Q2) Suppose that nine bakeries each tried to sell their products directly to eight supermarkets. The total number of exchange relationships that would be established is A) 22.
B) 56.
C) 72.
D) 96.
Q3) Logistics is concerned with the flow of information as well as with the flow of goods.
A)True
B)False
Q4) Some freight forwarders offer warehousing and customs assistance.
A)True
B)False
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Chapter 16: Using Effective Promotions
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262 Verified Questions
262 Flashcards
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Sample Questions
Q1) The purpose of interactive promotion is to create a monologue that convinces customers to act quickly.
A)True
B)False
Q2) Nicola is a salesperson at one of Epic Electronics' retail stores. As an effective salesperson, Nicola is expected to help her customers resolve any doubts they might have before the sale, and follow up to ensure that the customer is satisfied after the sale.
A)True
B)False
Q3) At an Epic Electronics retail store, management knows the value of reassuring their current customers that they made the right choice when they decided to give Epic their business. Testimonials would be an effective promotional activity to confirm the purchase decisions of Epic's customers.
A)True
B)False
Q4) Advertising covers the major production costs of television and radio programs.
A)True
B)False
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Page 18
Chapter 17: Understanding Accounting and Financial Information
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362 Verified Questions
362 Flashcards
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Sample Questions
Q1) One important source of financing for most small businesses is the owner's savings. If the owner contributes money to the business from his/her personal savings, it will be recorded in the owners' equity account on the balance sheet.
A)True
B)False
Q2) There are five key working areas in accounting: financial accounting, managerial accounting, auditing, tax accounting, and governmental and not-for-profit accounting.
A)True
B)False
Q3) A firm's basic earnings per share measures how much profit was earned for each dollar invested by the firm's owners.
A)True
B)False
Q4) Assets are reported on the firm's balance sheet. A)True
B)False
Q5) What is ratio analysis? Explain the four different types of ratios and how each is used.
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Chapter 18: Financial Management
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Sample Questions
Q1) Which of the following commonly results in the financial failure of a firm?
A) diversification
B) undercapitalization
C) control of expenses
D) management of cash flows
Q2) A firm's short-term financial forecast provides a projected sales estimate.
A)True
B)False
Q3) ________ offer short-term secured loans to high-risk borrowers. These loans usually require collateral.
A) Commercial finance companies
B) Reserve banks
C) Credit brokers
D) Investment bankers
Q4) Identify and describe three types of short-term financing.
Q5) Equity financing may involve the sale of stock (representing ownership) to new investors.
A)True
B)False
Q6) Identify and describe the major steps involved in financial planning.
Page 20
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Chapter 19: Using Securities Markets for Financing and Investing Opportunities
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397 Verified Questions
397 Flashcards
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Sample Questions
Q1) Stock exchanges compete with each other for the listing of a corporation's stock. A)True
B)False
Q2) Both stocks and bonds represent temporary sources of funding for a firm. Eventually they must be repaid.
A)True
B)False
Q3) Once a stock exchange agrees to list a company, the firm can be assured that it will always be listed by that exchange.
A)True
B)False
Q4) The Securities and Exchange Commission does not intercede in any way in the process of an IPO. Doing so would disrupt the natural process of the capital markets. A)True
B)False
Q5) Americans have invested over $15 trillion in mutual funds.
A)True
B)False
21
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Chapter 20: Money, Financial Institutions, and the Federal Reserve
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306 Verified Questions
306 Flashcards
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Sample Questions
Q1) Created during the Great Depression, the federal deposit insurance program resulted in a large number of bank failures.
A)True
B)False
Q2) Which of the following is included in the M-2 definition of the money supply but NOT in the M-1 definition?
A) currency
B) checking account deposits
C) traveler's checks
D) savings account deposits
Q3) Depositors represent a bank's primary responsibility, while borrowing customers are secondary.
A)True
B)False
Q4) An electronic funds transfer system (EFT) is an electronic transaction system used for paying bills, making direct deposits of paychecks, and paying for a purchase.
A)True
B)False
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Chapter 21: Appendix: Working Within the Legal Environment
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Sample Questions
Q1) ________ is the legal process by which a person, business, or government entity unable to meet financial obligations is relieved of those debts.
A) Emancipation
B) Financial release
C) Negligence
D) Bankruptcy
Q2) Specific performance means that a person who violates a contract is required to live up to the agreement even if money damages are adequate.
A)True
B)False
Q3) The Sherman Antitrust Act forbids actual monopolies or attempts to monopolize any part of commerce.
A)True
B)False
Q4) The Environmental Protection Agency is an example of a(n)
A) common law agency.
B) statutory judicial agency.
C) private placement agency.
D) administrative agency.
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Chapter 22: Appendix: Using Technology to Manage Information
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192 Verified Questions
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Sample Questions
Q1) Bennett just got started using a storage method called Dropbox. He stores most of his information with this service. Bennett is using cloud computing.
A)True
B)False
Q2) The most likely reason a firm would decide to establish an extranet would be the desire to
A) speed the flow of information on its private network by increasing the bandwidth.
B) make the information on its network widely available to the general public.
C) share information and collaborate with a select group of outside organizations or individuals.
D) overcome the speed and capacity limitations of its external connection to the Internet by gaining access to the very-high-speed Backbone Network Service.
Q3) Beginning with the late 1980s the goal of information technology was to
A) improve the flow of financial information throughout business organizations.
B) use new technologies to offer new methods of conducting business.
C) prevent proprietary information from falling into the hands of competitors.
D) use new technologies to improve old methods.
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Page 24
Chapter 23: Appendix: Managing Risk
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Sample Questions
Q1) ________ is the armor individuals, businesses, and nonprofit organizations use to protect themselves from various financial risks.
A) A good accountant
B) Investment in AAA bonds
C) Insurance
D) Indemnity
Q2) Self-insurance is the practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.
A)True
B)False
Q3) Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.
A)True
B)False
Q4) Going bare is a much less risky strategy for self-insurance.
A)True
B)False
Q5) Explain the four ways of managing risk.
Q6) Explain what makes the acceptance of risk possible for insurance companies.
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Chapter 24: Appendix: Managing Personal Finances
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Sample Questions
Q1) A ________ is a document that names a guardian for your children, states how you want your assets distributed, and names an executor to handle your estate when you die.
A) trust arrangement
B) durable power of attorney
C) proxy sheet
D) will
Q2) Both the Roth and traditional IRA allow individuals to put as much money as they want into their retirement account.
A)True
B)False
Q3) Before getting married, a couple should discuss and agree upon a financial strategy.
A)True
B)False
Q4) Luke wants to get better control of his personal finances. He should begin by setting up a personal balance sheet and a personal income statement.
A)True
B)False
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