Business Environment
Practice Exam
Course Introduction
The Business Environment course provides an in-depth understanding of the external and internal factors that influence business operations and decision-making. Students will explore the economic, legal, political, social, and technological forces that shape the business landscape, examining how organizations adapt to and anticipate environmental changes. The course covers topics such as market structures, governmental policies, globalization, ethics, sustainability, and competitive dynamics, enabling students to analyze the impact of these elements on business strategy and performance. Through case studies and real-world examples, learners develop the skills to evaluate opportunities and threats within the dynamic environment in which businesses operate.
Recommended Textbook
Future of Business 5th Canadian Edition by Norm Althouse
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Page 2
Chapter 1: Political Environment
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Sample Questions
Q1) What are the three levels of government in Canada?
A) federal, provincial, municipal
B) federal, state, city
C) country, province, city
D) country, province, municipality
Answer: A
Q2) Which of the following holds a company responsible for negligence in the production, design, sale, or use of products the company markets?
A) breach of contract
B) price discrimination
C) unintentional harm responsibility
D) product liability
Answer: D
Q3) What type of warranty is the one you receive in the box with your new DVD?
A) an implied warranty
B) an express warranty
C) a uniform warranty
D) a commercial warranty
Answer: B
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Page 3
Chapter 2: Economic Environment
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Q1) Which type of GDP takes inflation into account and uses adjusted market prices?
A) real
B) frictional
C) adjusted
D) cyclical
Answer: A
Q2) For the past 10 years, Kris Boja has been a welder for a local manufacturer. This morning her boss informed her that a robot would replace her. Boja's unemployment is an example of which type of unemployment?
A) cyclical
B) mechanical
C) structural
D) frictional
Answer: C
Q3) Which of the following is a way for a company to double its profits?
A) increase the prices on its existing products
B) reduce customer defections
C) launch new products
D) cut expenses
Answer: B
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Chapter 3: Social Environment
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Sample Questions
Q1) According to one market researcher, which generation will be the first to not live as well as their parents?
A) Generation Y
B) Generation X
C) the baby boomers
D) Generation Z
Answer: B
Q2) Component lifestyles have evolved because consumers can choose from a growing number of goods and services, and most have the money to exercise more options.
A)True
B)False
Answer: True
Q3) Cash donations of equipment and products and support for volunteer efforts of employees are all aspects of which of the following?
A) corporate philanthropy
B) whistle-blowing
C) social contract
D) social responsibility
Answer: A
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Page 5
Chapter 4: Technological Environment
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Sample Questions
Q1) Which of the following refers to the practical application of knowledge?
A) a transaction system
B) smartphone apps
C) a data-processing system
D) technology
Q2) Technology has allowed individuals to save time and keep us informed and connected.
A)True
B)False
Q3) E-commerce companies like Amazon, Shop.ca, and Alibaba are classified as which of the following?
A) channel disruptors
B) deep discounters
C) intermediaries
D) cyberfirms
Q4) Businesses can minimize overhead by getting rid of the "brick" and moving to the click.
A)True
B)False
Q5) Different technology systems can cause a problem in which aspect of businesses?
Page 6
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Chapter 5: International Environment
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Sample Questions
Q1) Pierre Cardin gives technical advice on textile manufacturing to China and in exchange receives silk and cashmere. This is an example of which of the following?
A) counteroffer
B) joint venture
C) countertrade
D) contra-deal
Q2) Which of the following is a benefit associated with free trade and globalization?
A) a closed economy
B) increased per capita income
C) declining productivity
D) an increase in the number of better-paying jobs
Q3) The European Union has 35 member countries.
A)True
B)False
Q4) Latvia had a favourable balance of trade last year when it exported $2.3 billion and imported $3.9 billion.
A)True
B)False
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Page 7
Chapter 6: Entrepreneurship and Small Business
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Sample Questions
Q1) Over half of small businesses in Canada are found in found industries. Which of the following is NOT one of those four industries?
A) construction
B) manufacturing
C) professional, scientific and technical services
D) wholesale and retail trade
Q2) One way for the owner of a small business to keep in touch with all aspects of the business is to have a solid business plan.
A)True
B)False
Q3) The most common use of a business plan is to persuade lenders and investors to finance the venture.
A)True
B)False
Q4) Which of the following is a common motive for becoming an entrepreneur?
A) wanting to be rich and powerful
B) to impress friends and family
C) control one's own destiny
D) dissatisfaction with one's current job
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Chapter 7: Understanding the Business
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Sample Questions
Q1) When a company makes use of SWOT analysis, what is one of its objectives?
A) identify the best employees to fill each position within the organization
B) set specific short-term performance standards for each department
C) evaluate the desirability of issuing stocks or bonds in the current financial climate
D) identify the things it does well as an organization and the things it needs to improve
Q2) Customers who visit any Good As New Appliance Repair Centre see a framed statement prominently displayed near the front door. The plaque describes the company's fundamental purposes. In part, it states that "All Good As New Centres operate under the belief that every customer deserves good quality parts, fast and dependable service, and a fair price." The words on this plaque probably reflect which of the following of Good As New?
A) strategic plan
B) mission statement
C) corporate agenda
D) corporate charter
Q3) The statement of cash flows shows the cash flowing into and out of a company.
A)True
B)False
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Chapter 8: Forms of Business Ownership
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Q1) The franchise agreement is best described by which of the following?
A) It guarantees that the franchisor will make a profit.
B) It must be approved by the Toronto Stock Exchange.
C) It guarantees that the franchisee will make a profit.
D) It is the contract that details the terms of the franchise.
Q2) What is the first step in incorporating a company?
A) Write the articles of incorporation.
B) Hold an organizational meeting.
C) Select the company's name.
D) Buy necessary licences and pay required taxes.
Q3) Leveraged buyouts (LBO) are inefficient and do not generate enough cash to service the debt that was created by the merger.
A)True
B)False
Q4) Which of the following is an advantage of sole proprietor ownership?
A) ease with which qualified employees can be found
B) ease with which capital can be raised
C) limited liability
D) less government regulation
Q5) Discuss the following statement: "Joint ventures have unlimited life."
Page 10
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Chapter 9: Management and Leadership in Todays Organizations
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Sample Questions
Q1) Managers must perform interpersonal, informational, and decisional roles.
A)True
B)False
Q2) Which of the following is NOT one of the five key types of power?
A) expert power
B) coercive power
C) referent power
D) financial power
Q3) List the three types of participative leadership.
Q4) Which two leadership styles use empowerment?
A) autocratic and free rein
B) autocratic and laissez-faire
C) autocratic and participative
D) laissez faire and participative
Q5) A supervisor who possesses the ability to view an organization as a whole and understand how the various parts are interdependent has conceptual skills.
A)True
B)False
Q7) What is management? Page 11
Q6) Define organizing as a process of management.
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Chapter 10: Designing Organizational Structures
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Q1) A company with a narrow span of control, which tends to have many managerial levels and a long chain of command, is said to have which type of organizational structure?
A) tall
B) flat
C) networked
D) wide
Q2) A network of Benetton retail sales agents select the Benetton designs that they feel will appeal to Benetton retail customers. The responsibility for picking the next "hot style" is in the hands of this group. This is an example of which of the following?
A) matrix structure
B) committee structure
C) functional structure
D) subordinated structure
Q3) What does the informal organization provide?
A) It makes it more difficult to orient new employees.
B) It offers friendship opportunities and social contact.
C) It diminishes status and recognition.
D) It gives employees less control over their work environment.
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Page 13
Chapter 11: Motivating Employees
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Q1) Which of the following allows management to focus on achievable goals to realize the best possible results with the resources available?
A) management by objectives
B) expectancy theory
C) equity theory
D) scientific management
Q2) Which of the following means that a portion of an employee's pay is directly linked to an individual or organizational performance measure?
A) a fee for work
B) variable pay
C) performance-based pay
D) pay on commission
Q3) According to Maslow's hierarchy of needs, people need to feel secure, to be protected from physical harm, and to avoid the unexpected. These are called safety needs.
A)True
B)False
Q4) What was the primary flaw in Frederick Taylor's scientific management?
Q5) What are managers doing when they vertically expand an employee's job?
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Chapter 12: Managing Human Resources and Labour Relations
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Q1) In the union shop, a non-union member may be hired, but after a probationary period he or she must join the union or leave.
A)True
B)False
Q2) Which of the following is a union that consists of many local unions in a particular industry, skilled trade, or geographic area and thus represents workers throughout an entire country?
A) union aggregate
B) federated union
C) union conglomerate
D) national union
Q3) LaDonna Nilsson assembles electronic boards. She is paid $4 a board for the first 10 boards, then $6 for each one after that. Nilsson is working on which of the following systems?
A) commission
B) task-reward
C) piecework payment
D) comparable worth
Q4) What is the first step in human resource planning?
Page 15
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Chapter 13: Marketing
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Sample Questions
Q1) In marketing research, what are the two questions that must be asked in order to define the marketing problem?
Q2) In which of the following does an interviewer interact with respondents, either in person or by mail, to obtain facts, opinions, and attitudes?
A) secondary research
B) survey research
C) observation research
D) experimental research
Q3) What is the number of people or businesses within a certain area?
A) geographic dispersion
B) market density
C) population distribution
D) people volume
Q4) Which of the following best describes the marketing concept?
A) It is primarily concerned with what the competition is doing.
B) It satisfies customers' wants and needs legally and responsibly.
C) It affects only an organization's marketing department.
D) It is concerned with the achievement of short-term goals.
Q5) What kind of segmentation is the publisher of Seventeen magazine using?
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Chapter 14: Creating Marketing Strategies
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Q1) What is the term for pricing a product at $399.99 instead of $400 to make the customer view the price as in the $300 range instead of the $400 range?
A) price lining
B) odd-even pricing
C) minimized pricing
D) red-line pricing
Q2) Which of the following business products would be considered an accessory in an insurance claims office?
A) computer
B) computer paper
C) printer cartridge
D) photocopier cartridge
Q3) If a product survives the introductory stage of the product life cycle, it advances to the maturity stage.
A)True
B)False
Q4) What is another name for psychological pricing?
Q5) List the four stages of the product life cycle.
Q6) Give an example of bundling.
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Chapter 15: Achieving World-class Operations Management
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Sample Questions
Q1) Low volume, short production runs, and high-variety production are characteristic of the continuous process.
A)True
B)False
Q2) Which of the following is one of the biggest shortcomings of Gantt charts?
A) They cannot be used to identify bottlenecks.
B) They assign three time estimates for the completion of each task.
C) They are static.
D) They cannot be used for simple tasks.
Q3) List two commonly used techniques for streamlining a business's production.
Q4) Which of the following approaches is a computerized resource planning system that includes information about the company's suppliers and customers as well as data generated internally?
A) enterprise resource planning
B) the PERT chart
C) manufacturing resource planning II
D) manufacturing resource planning
Q5) Site selection is a part of production planning.
A)True
B)False
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Chapter 16: Accounting for Financial Success
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Q1) By dividing cost of goods sold by the average inventory to measure the speed with which inventory moves through the company and is turned into sales, which of the following ratios is calculated?
A) price-earnings ratio
B) inventory turnover ratio
C) profitability ratio
D) sales to inventory ratio
Q2) Which of the following is an example of an intangible asset for a manufacturer of padlocks?
A) patent on a titanium lock mechanism
B) money owed to the company by a superstore chain
C) machine for forming the locks out of sheet metal
D) warehouse for storing locks
Q3) What is another term for owners' equity?
A) assets
B) gross worth
C) net worth
D) liabilities
Q4) What do debt ratios measure?
Q5) What is another name for the ratio of net profit to net sales?
Page 19
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Chapter 17: Understanding Money and the Canadian Financial System
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Sample Questions
Q1) Which of the following is the biggest benefit of online investing?
A) more advice
B) faster trades
C) lower transaction costs
D) better information
Q2) The Canadian Deposit Insurance Corporation insures deposits in commercial banks. What is the maximum amount at a single institution that CDIC will insure someone for?
A) $25,000
B) $50,000
C) $100,000
D) $200,000
Q3) Which of the following are large pools of money set aside by corporations, unions, and governments for later use in paying retirement benefits to their employees or members?
A) pension funds
B) unemployment benefits
C) workers' compensation funds
D) slush funds
Q4) How has deregulation affected the financial services industry?
Page 20
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Chapter 18: Finance
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Q1) Which of the following are specially trained mathematicians who use the law of large numbers to develop tables that show the likeliness of a peril?
A) actuaries
B) chartered accountants
C) derivative officers
D) certified financial analysts
Q2) In finance, what is the potential for loss?
A) leverage
B) risk
C) business chance
D) factoring
Q3) Financial management is best described by which of the following?
A) It is typically performed by a company's CEO.
B) It uses financial statements prepared by accountants to make financial decisions.
C) Its purpose is to collect and present financial data.
D) It is completely different from accounting.
Q4) Dividends and interest payment are both tax-deductible.
A)True
B)False
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