Business Environment
Exam Solutions
Course Introduction
The Business Environment course explores the various internal and external factors that influence organizational operations and decision-making. Topics include economic systems, legal and regulatory frameworks, social and cultural influences, technological advancements, and the global marketplace. Through case studies and practical examples, students will analyze how businesses adapt to changing environments and the impact these factors have on strategy, innovation, and long-term success. The course provides a foundational understanding essential for navigating and responding to the dynamic nature of the business world.
Recommended Textbook
Understanding Business 11th Edition by William Nickels
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25 Chapters
7941 Verified Questions
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Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment
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327 Verified Questions
327 Flashcards
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Sample Questions
Q1) Entrepreneurs weigh the differences between the benefits of starting a business and those things that they are likely to forego because they choose to work for themselves. Such things they are likely to pass-up on are:
A) the freedom to make their own decisions.
B) local government benefits such as enterprise zone tax credits.
C) employer paid benefits such as paid vacation and health insurance.
D) tickets to sporting events that trading partners may provide.
Answer: C
Q2) Which of the statements about demography is most accurate? Demographic studies:
A) focus on factors that have great political relevance, but little relevance to business firms.
B) suggest that the number of single-parent families will decline in the future.
C) provide businesses and individuals with insights into business and career opportunities for the future.
D) are an important source of information about changes in health patterns.
Answer: C
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3
Chapter 2: Understanding Economics and How It Affects Business
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Sample Questions
Q1) Adam Smith believed that since businesspeople are motivated to improve their own prosperity, their actions are unlikely to benefit society as a whole.
A)True
B)False
Answer: False
Q2) __________ unemployment refers to persons who purposefully quit their jobs and have not yet found a new job.
A) Frictional
B) Structural
C) Cyclical
D) Seasonal Answer: A
Q3) According to the Reaching Beyond Our Borders box, Africa has been one of the fastest-growing regions in the 21<sup>st</sup> century.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Doing Business in Global Markets
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Sample Questions
Q1) The __________ represents the first attempt to establish a truly global mediation center to resolve international trade disputes.
A) International Trade Court
B) World Trade Organization
C) Global Trade Commission
D) United Nations Arbitration Center
Answer: B
Q2) As students think about a career in the business world today, which of the following is a good strategic suggestion?
A) Study a foreign language.
B) Secure a job with a large multinational corporation.
C) Stay away from franchising due to the saturation of this form of business globally.
D) Avoid spending a lot of time studying fluctuations in currencies because a global currency is imminent.
Answer: A
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Chapter 4: Demanding Ethical and Socially Responsible Behavior
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Sample Questions
Q1) A phone call to a government official by an employee of the Enron Corporation disclosed the deception and dishonesty of the firm's accounting records. This employee played the role of a:
A) whistleblower.
B) horn blower.
C) cheerleader.
D) moral policeman.
Q2) Insider trading involves:
A) an Internet activity that establishes a barter exchange system between businesses.
B) investors using private company information to further their own fortunes.
C) the exchange of assets between companies in the same industry.
D) a payment or reward for socially conscious behavior.
Q3) A list of "watchdogs" (including customers, socially conscious investors, and environmentalists) monitor how well firms enforce their ethical and social responsibility policies.
A)True
B)False
Q4) Explain the difference between a compliance-based ethics code and an integrity-based ethics code.
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Chapter 5: How to Form a Business
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Sample Questions
Q1) When two companies in completely unrelated industries agree to become one firm, the result is called a:
A) vertical merger.
B) joint venture.
C) conglomerate merger.
D) horizontal merger.
Q2) Stockholders in a corporation have limited liability.
A)True
B)False
Q3) Starting a new business as a sole proprietorship:
A) requires retaining the services of an attorney.
B) is simple, but the proprietorship fee is very expensive in some states.
C) is usually simpler and less expensive than starting other forms of ownership.
D) is very similar to starting a business as a corporation.
Q4) A corporation can raise financial capital by selling shares of stock to interested investors.
A)True
B)False
Q5) Describe and differentiate between the three types of corporate mergers. Give an example of each type.
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Chapter 6: Entrepreneurship and Starting a Small Business
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Sample Questions
Q1) The Small Business Administration sponsors volunteers from industry, trade associations, and education who offer advice to small business owners. These volunteers are called:
A) the Small Business Council of Volunteers.
B) Partners in Service and Economic Progress.
C) Small Business Counselors Incorporated.
D) the Service Corps of Retired Executives.
Q2) Successful small business owners are:
A) not good sources for information on starting your own business because they generally do not understand failure.
B) valuable sources for information since you can learn from their experiences.
C) good but risky since their keen sense of sniffing out something with potential will tempt them to steal your ideas.
D) valuable sources of information, but you should proceed with caution because talking with someone who could eventually be your competitor may cross the line due to federal trade commission laws.
Q3) Upwards of 80% of all U.S. workers find their first job in small business.
A)True
B)False
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Page 8
Chapter 7: Management and Leadership
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Sample Questions
Q1) The downsizing that has occurred in recent years has __________ middle managers in many organizations
A) increased the number of B) eliminated the jobs of some C) strengthened the control of D) increased the importance of
Q2) Contingency planning is most important in markets where conditions are relatively stable and market growth is predictable.
A)True
B)False
Q3) Fatma wants to become a manager. However, she is shy and avoids conversation with strangers. She is very comfortable with computers and information technology and has great technical skills in these areas. Fatma's personal traits make her a good candidate for a top management position.
A)True
B)False
Q4) Management carries out of the vision created by leadership.
A)True
B)False
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Chapter 8: Structuring Organizations for Todays
Challenges
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Sample Questions
Q1) In today's fast-paced business environment, Weber's bureaucratic ideas work well. These principles permit business to respond quickly to customer changes.
A)True
B)False
Q2) One of Fayol's principles suggests that managers should have the right to give orders and expect others to follow.
A)True
B)False
Q3) The widely shared values within an organization that provide unity and cooperation to achieve common goals are together known as the:
A) normative matrix.
B) predefined group values.
C) ethical system.
D) organizational culture.
Q4) Cross-functional teams work well when leadership of the team is shared.
A)True
B)False
Q5) Discuss Max Weber's views on organization theory.
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Chapter 9: Production and Operations Management
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Sample Questions
Q1) Operations management transforms resources into goods and services, such as a landscape company that utilizes equipment, labor, and materials to develop a landscape. Managing this operation may also involve maintenance services.
A)True
B)False
Q2) Operations management moves from knowing the needs of consumers to actually satisfying those needs.
A)True
B)False
Q3) Manufacturing output in the U.S. continues to increase. The high unemployment of skilled workers who previously worked in the manufacturing sector
A) is the result of untrained laborers.
B) is strictly a factor of U.S. manufacturing companies outsourcing the majority of their work.
C) can be reconciled by the fact that manufacturing is very efficient and requires fewer workers to produce the same amount, or even more output.
D) can be attributed to manufacturing going green.
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Chapter 10: Motivating Employees
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Sample Questions
Q1) According to expectancy theory, employees in a given organization tend to have very similar expectations.
A)True
B)False
Q2) The practice of moving employees from one job to another to make work more interesting is called:
A) task mobility.
B) job rotation.
C) job incrementation.
D) worker alternation.
Q3) Motivation is largely the result of external rewards and punishments.
A)True
B)False
Q4) Regardless of cultural background, most employees respond the same way to motivational approaches.
A)True
B)False
Q5) To implement self-managed teams, managers at most companies must reinvent work.
A)True
B)False
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Chapter 11: Human Resource Management: Finding and
Keeping the Best Employees
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Sample Questions
Q1) The information contained in performance appraisals helps managers:
A) write job descriptions.
B) compute the firm's overall performance in terms of a rate of return on investment.
C) evaluate job applicants.
D) make decisions about promotions, compensation, training, and firing.
Q2) Julie Daniels recently became a member of the Plumbers Union. She has been told she will work with John Weimeister, a skilled and experienced plumber, for at least three years in order to learn all of the skills and techniques of her craft. This type of training is referred to as:
A) skill replication.
B) applied supervision.
C) apprenticeship training.
D) vestibule training.
Q3) Workers who are paid a __________ receive a fixed compensation weekly, biweekly, or monthly.
A) commission
B) salary
C) piece rate
D) royalty
13
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Chapter 12: Dealing With Union and Employeemanagement Issues
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Sample Questions
Q1) One strategy unions must adopt in order to grow in the future is to:
A) find ways to appeal to white-collar, female, and foreign-born workers.
B) find ways to prevent foreign companies from entering the U.S. market.
C) go back to the old methods of aggressive tactics and confrontation that were used successfully in the past.
D) emphasize recruiting efforts in the manufacturing sector of the economy.
Q2) According to noted economist Thomas Piketty:
A) top executives are entitled to any level of pay they can negotiate with their board of directors.
B) the annual pay for top executives should include a small guaranteed salary and should include a very large bonus in years where the firm earns higher profits than competitors.
C) all bonuses paid to CEOs should be tied to long-run increases in market share.
D) CEOs should not earn much more than 10-20 times the earnings of the company's average salary.
Q3) One in six violent crimes that are committed in the U.S. occur in the workplace.
A)True
B)False
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Chapter 13: Marketing: Helping Buyers Buy
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252 Flashcards
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Sample Questions
Q1) The four elements of the marketing mix are product, production, price, and predictability.
A)True
B)False
Q2) Target marketing is a business strategy that focuses a firm's marketing efforts toward a potentially profitable segment of a larger market.
A)True
B)False
Q3) Eavesdrop Communications just finished a telephone survey of several of their current customers. They plan to conduct in-depth personal interviews with about twenty additional customers. Both the telephone survey and the interviews are sources of primary data for Eavesdrop.
A)True
B)False
Q4) In the production era the greatest marketing need was for distribution and storage. A)True B)False
Q5) Identify and discuss the four eras of the evolution of marketing.
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Chapter 14: Developing and Pricing Goods and Services
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Sample Questions
Q1) Miranda is a marketing manager for a large manufacturer. Her boss has asked her to evaluate a new-product idea. One of the things Miranda wants to determine is how much of this product her firm would have to sell in order to break even. In order to compute this break-even level of sales, she will need to know the price of the good, the total fixed costs, and variable cost of producing each unit.
A)True
B)False
Q2) The job performed by brand managers:
A) is mainly concerned with the promotion of the entire product mix of their firm. B) involves broad responsibilities for the marketing of a specific brand or product line. C) is likely to become less important in firms that utilize the Internet. D) focuses more on the pricing and promotion of established goods than on the development of new products.
Q3) Price, store surroundings, service, and brand name are all elements that consumers evaluate in a total product offer.
A)True B)False
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Chapter 15: Distributing Products
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Sample Questions
Q1) Franchise systems, wholesaler-sponsored chains, and retail cooperatives are all forms of contractual distribution systems.
A)True B)False
Q2) Although drop shippers own merchandise they have shipped to buyers, they do not actually handle, stock, or deliver this merchandise themselves.
A)True B)False
Q3) The two main types of merchant wholesalers are storage wholesalers and distribution wholesalers.
A)True
B)False
Q4) Some economists would say that intermediaries add costs to the channel of distribution and need to be eliminated.
A)True B)False
Q5) What is logistics? Describe the types of issues you might deal with if you specialized in logistics.
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Chapter 16: Using Effective Promotions
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Sample Questions
Q1) Bonnie faces the challenge of developing the promotion mix for a new business. Given the uniqueness of the new products and a very limited budget, Bonnie confronts a creditability problem. She realizes that the promotional messages of an unknown firm may be met with skepticism. Bonnie should consider:
A) publicity to help create a positive image for her firm and its products.
B) the extensive use of persuasive advertising.
C) emphasizing personal selling rather than public relations.
D) changing jobs because this situation is hopeless.
Q2) The use of coupons and sales contests represent internal public relations and sampling activities.
A)True
B)False
Q3) At a recent sporting event, a local beer distributor gave free beverage mugs to all adults with a paid admission. This is an example of:
A) market segmentation.
B) sampling.
C) publicity.
D) sales promotion.
Q4) Explain the difference between viral marketing, blogging and podcasting.
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Chapter 17: Understanding Accounting and Financial Information
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Sample Questions
Q1) Taylor Casual, a chain of retail clothing stores, wants to assure investors and other outsiders that its financial statements are accurate. One way to do so would be to hire a public accounting firm to:
A) produce an internal audit.
B) take overall stock of its accounting functions.
C) provide a "generally accepted practices" endorsement.
D) perform an independent audit.
Q2) For firms that sometimes have difficulty selling their inventory, the current ratio is likely to be a better measure of liquidity than the acid-test ratio.
A)True
B)False
Q3) In an effort to maintain a competitive advantage, firms do not share accounting information with people outside of the firm.
A)True
B)False
Q4) The U.S. government is a user of a firm's accounting information.
A)True
B)False
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Chapter 18: Financial Management
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Sample Questions
Q1) The concept time value of money indicates:
A) the value of a dollar decreases over time as prices increase.
B) the prices of goods and services will fluctuate over time due to inflation and higher costs of production.
C) monetary systems tend to become more sophisticated over time.
D) a dollar received today is worth more than a dollar received a year from today.
Q2) Acquiring funds through equity financing requires the firm to pay annual dividends. A)True
B)False
Q3) Inability to attract and retain qualified employees is one of the most common ways for a firm to fail financially.
A)True
B)False
Q4) Tax payments are important to the finance manager because they represent a cash inflow to a firm.
A)True
B)False
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Page 20
Chapter 19: Using Securities Markets for Financing and Investing Opportunities
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Sample Questions
Q1) Corporate bonds provide investors the option of reselling the bond back to the issuing corporation at any time during the life of the bond.
A)True
B)False
Q2) Standard and Poor's and Moody's are well-known companies that rate bonds.
A)True
B)False
Q3) Samad wants to supplement his current investments with a high-risk, low-priced security. Which of these best fits his strategy of high risk, low price and a potentially high rate of return?
A) Time deposits
B) Penny stocks
C) Blue chip stocks
D) Split stocks
Q4) Issuing new common stock usually expands ownership, giving all owners the right to vote for the firm's board of directors.
A)True
B)False
Q5) Explain the differences between preferred stock and common stock.
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Chapter 20: Money, Financial Institutions, and the Federal Reserve
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Sample Questions
Q1) Early in our nation's history, people generally accepted the importance of a central bank authority.
A)True
B)False
Q2) The federal funds rate is the interest rate that banks charge each other.
A)True
B)False
Q3) Which of the following is a bank service provided to help companies conduct business in other countries?
A) Transaction letters
B) Certificates of deposit
C) Banker's depositories
D) Currency exchange
Q4) When the Fed increases the reserve requirement, banks:
A) must increase the dollar volume of loans they make to customers.
B) must pay more to borrow from the Fed.
C) have fewer funds available for lending.
D) will find their balance sheets temporarily out of balance.
Q5) Identify and discuss the tools and products that electronically transfer funds.
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Chapter 21: Managing the Marketing Mix: Product, Price,
Place and Promotion
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Sample Questions
Q1) The pricing objectives of a firm should be set independently of the other elements of their marketing mix.
A)True
B)False
Q2) Bob is a salesperson for a firm that markets products in a B2B market. His wife, Sally, is a salesperson for a retail store selling top-quality electronics goods. While Bob is likely to be successful using follow-up after the sale, Sally should avoid this approach.
A)True
B)False
Q3) An important reason for the popularity of direct marketing is that many people enjoy developing a personal relationship with a salesperson that comes directly to their home or place or work.
A)True
B)False
Q4) While word of mouth represents an effective promotional tool, the need for face-to-face communication limits its usefulness.
A)True
B)False
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Chapter 22: Extension: Working Within the Legal Environment
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Sample Questions
Q1) The most popular form of bankruptcy among individuals is Chapter 11.
A)True
B)False
Q2) The purpose of the Sherman Antitrust Act was to:
A) encourage competition by restraining the growth of monopolies.
B) standardize the level of competition.
C) encourage the growth of large-scale efficiency found in big businesses.
D) minimize the inconsistency of multiple dealers of a single product.
Q3) When a payee signs the back of a check the payee's signature is referred to as an endorsement.
A)True
B)False
Q4) It appears that some regulation of business is necessary to ensure fair and honest dealings with the public.
A)True
B)False
Q5) Describe bankruptcy and three sections of the Bankruptcy Code.
Q6) The U.S. court system is organized solely at the federal and state levels.
A)True
B)False Page 24
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Chapter 23: Extension: Using Technology to Manage Information
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Sample Questions
Q1) A(n) _______ is someone who breaks into a computer system for illegal purposes.
A) network crasher
B) drive jockey
C) arbitrageur
D) hacker
Q2) Lernital University is connected to Internet2, and several professors in its school of engineering are engaged in a research project that makes extremely heavy use of the bandwidth this connection provides. In fact, the engineering professors would like to get even more bandwidth. Given the way its designers set up Internet2, the researchers at Lernital:
A) are out of luck. One drawback of Internet2 is that, unlike the regular Internet, the technology of Internet2 can allocate only a fixed amount of bandwidth to each user.
B) may be able to obtain more bandwidth, but only if the university is willing to pay for it.
C) must petition the Internet2 Usage Committee and obtain approval.
D) can install a simple bandwidth amplification card in each computer that compresses data, thus allowing it to flow more rapidly.
Q3) What are the four characteristics of useful information?
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Chapter 24: Extension: Managing Risk
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Sample Questions
Q1) Home-based business owners add a ________ to their homeowner's insurance policy to ensure that they have adequate coverage.
A) deductible unit
B) compensation clause
C) rider
D) tag
Q2) Self-insurance makes more sense for firms that operate one large facility than it does for firms with facilities scattered all over the country.
A)True
B)False
Q3) ________ is a term that refers to the chance of loss, the degree of probability of loss, and the amount of possible loss.
A) Speculation
B) Hazard
C) Insurability
D) Risk
Q4) The chance of a fire is an example of a pure risk.
A)True
B)False
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Chapter 25: Extension: Managing Personal Finances
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Sample Questions
Q1) Real estate taxes and mortgage interest payments are both:
A) expenses of home ownership on which the government levies a tax.
B) tax deductible for renters.
C) tax deductible for homeowners.
D) taxable income for renters and homeowners.
Q2) A simple IRA, which allows workers to contribute larger amounts than a regular IRA, is available to employees who work for firms with fewer than 100 employees.
A)True
B)False
Q3) For someone with a family that includes young children, the first step in estate planning should be to:
A) establish a will.
B) set up a trust fund for each child.
C) select a guardian for the children.
D) give each child his or her own savings account.
Q4) An individual retirement account (IRA) is a tax-deferred investment plan designed to encourage workers to save for retirement.
A)True
B)False
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