Principles of Business Exam Review
Course Introduction
Principles of Business introduces students to the foundational concepts and practices of the business world, including the functions of management, marketing, finance, human resources, operations, and entrepreneurship. The course explores the structure, role, and environment of businesses in the modern economy, highlighting the importance of ethical decision-making and innovation. Through case studies and practical examples, students gain a broad understanding of how organizations operate, adapt to change, and create value, preparing them for further study or careers in business-related fields.
Recommended Textbook Business in Action 7th Edition by Courtland L. Bovee
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Page 2
Chapter 1: Developing a Business Mindset
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Sample Questions
Q1) What are the functions of HR specialists and managers? How has the role of the HR function changed over time.Compare it with the functions of a chief information officer. Answer: HR specialists and managers plan and direct human resource activities that include recruiting,training and development,compensation and benefits,employee and labor relations,and health and safety.Additionally,HR managers develop and implement human resources systems and practices to accommodate a firm's strategy and to motivate and manage diverse workforces.In the past,HR was seen by many as a lower-level function concerned mostly with processing employee records and other tactical duties.However,in many companies,the HR function is becoming more strategic and focused on the global competition to find,attract,and keep the best talent on the market.
Like HR,information technology (IT)is evolving from a tactical support function to a critical strategic component.Reflecting IT's strategic importance,many midsize and large companies now have a chief information officer (CIO)position at the executive level to plot IT strategy.
Q2) The service sector now dominates the U.S.economy.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Understanding Basic Economics
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Sample Questions
Q1) ________ taxes,levied on retail purchases made by customers,are collected by retail businesses at the time of the sale and then forwarded to state governments.
A) Income
B) Property
C) Sales
D) Excise
E) Payroll
Answer: C
Q2) In a country,the government owns many of the key industrial sectors,such as transportation,health care,and communications.Private ownership,however,is allowed in other industries.What type of economic system does this country have?
A) communism
B) capitalism
C) free-market economy
D) socialism
E) totalitarianism
Answer: D
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Chapter 3: The Global Marketplace
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Sample Questions
Q1) Economies of scale are savings from not buying too much of any one thing.
A)True
B)False
Answer: False
Q2) Transparency International is a(n)________.
A) accounting agency that promotes the use of unified accounting systems across the world
B) watchdog group that works to reduce business-government corruption around the world
C) agency that works toward implementing protectionist regimes across the globe
D) agency of the United Nations that is formed to mediate international negotiations
E) agency of the United Nations that is formed to investigate transparency issues in international trade
Answer: B
Q3) Strong dollar will lower the cost of goods that the U.S.exports.
A)True
B)False
Answer: False
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Chapter 4: Business Ethics and Corporate Social Responsibility
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Q1) Discuss the two-tiered approach to CSR.
Q2) Since its inception,Whole Foods Market has contributed 5% of its profits to charitable endeavors.At Whole Foods Market,company leaders believe they have responsibilities beyond making a profit.The firm has a ________ approach to CSR.
A) cynical
B) minimalistic
C) primary
D) philanthropic
E) proactive
Q3) Discuss some of the key responsibilities that employers have regarding employees.Compare them with the responsibility they have toward consumers.
Q4) ________ involves donating money,employee time,or other resources to various causes without regard for any direct business benefits for the company.
A) Philanthropy
B) Strategic CSR
C) Cap and trade
D) Sustainable development
E) Affirmative action
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Chapter 5: Forms of Ownership
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Sample
Questions
Q1) Carton Life is an insurance firm.The firm wants to enter an Asian country that recently removed protectionist barriers in the insurance industry.The company wants to enter the country with the help of a local firm.However,the company does not want to permanently integrate with another firm.Which of the following arrangements is most suited for this company?
A) amalgamation
B) acquisition
C) merger
D) joint venture
E) strategic alliance
Q2) 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
Q3) Compare and contrast private corporations and public corporations.
Q4) An S corporation has the federal taxation advantages of a partnership.
A)True
B)False
Q5) What is shareholder activism?
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Chapter 6: Entrepreneurship and Small Business Ownership
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Q1) Which of the following statements is TRUE about the Service Corps of Retired Executives (SCORE)?
A) It is a resource partner of the SBA.
B) It works on a contractual basis with large businesses.
C) It offers advice and one-to-one counseling to entrepreneurs, in return for company shares.
D) It offers resources and programs to minority-owned businesses.
E) It hires retired executives to work as consultants for a nominal fee.
Q2) Celera Inc.,a soap manufacturing firm based in Colorado,needs to raise capital to fund its product development plans.The firm decides to offer its shares of ownership to the public for the first time,and lists its securities on a public exchange.This is termed as
A) a private placement initiative (PPI)
B) a secondary market offering (SMO)
C) a secondary equity offering (SEO)
D) an initial public offering (IPO)
E) an international funding foray (IFF)
Q3) Discuss banks and microlenders as sources of private financing.How does it differ from seeking funds by going public?
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Page 8
Chapter 7: Management Roles, Functions, and Skills
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Q1) Management is the process of planning,organizing,leading,and controlling to meet organizational goals.
A)True
B)False
Q2) Julia is the product manager of an automobile manufacturer.She allots part of her duties to her subordinates and involves them when making key decisions.She is receptive to new ideas and accepts valuable ideas from others.Julia is a ________ leader.
A) autocratic
B) democratic
C) laissez-faire
D) directive
E) transactional
Q3) Which of the following is a typical role of middle managers in an organization?
A) defining the strategic orientation of the organization
B) supervising workers on an assembly line
C) supervising knowledge workers
D) making long-range plans for the organization
E) translating strategic goals and objective into actions
Q4) Explain the decisional roles of managers.
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Chapter 8: Organization and Teamwork
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Q1) Texas Motors,a car manufacturing company,groups its departments around the three lines of cars it manufactures.Each product division encompasses all the major functional resources required to achieve its goals.This indicates that Texas Motors has a functional structure.
A)True
B)False
Q2) A centralized organization concentrates decision-making authority at the upper levels of the organization.
A)True
B)False
Q3) Which of the following is a defining characteristic of a cross-functional team?
A) It manages its own activities and requires minimal supervision.
B) It is is organized along the lines of the organization's vertical structure.
C) It is composed of members at two or more geographic locations.
D) It is typically composed of managers and employees within a single functional department.
E) It often involves some form of matrix structure.
Q4) Compare and contrast line organization and line-and-staff organization.
Q5) Compare and contrast centralization with decentralization.
Q6) Discuss the advantages and disadvantages of work specialization.
Page 10
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Chapter 9: Production Systems
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Q1) The period of time between placing an order for supplies and receiving the material is called ________.
A) process forecast
B) run time
C) lead time
D) lag time
E) procurement delay
Q2) A supply chain ________.
A) cannot be distinct for different departments
B) is applicable for services rather than goods
C) has only two components
D) does not include end customers
E) coordinates the flow of goods and materials
Q3) ________ refers to determining the right quantities of supplies and products to have on hand and tracking where those items are.
A) Customer relationship management
B) Summative evaluation
C) Quality control
D) Inventory control
E) Statistical process control
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Chapter 10: Employee Motivation
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Sample Questions
Q1) Compare and contrast job enrichment with job enlargement.
Q2) Job enrichment expands a job horizontally.
A)True
B)False
Q3) According to Maslow,higher-level needs can serve as motivators even if lower level needs are not yet met.
A)True
B)False
Q4) The Hawthorne studies were simpler and less influential than suggested by the Hawthorne effect.
A)True
B)False
Q5) Discuss the risks and limitations of the goal-setting theory.
Q6) Compare and contrast positive reinforcement with negative reinforcement.
Q7) Compare and contrast management by objectives with the job characteristics model.
Q8) What is Herzberg's two-factor theory? How do hygiene factors differ from motivators.
12
Q9) Compare and contrast Theory X with Theory Y.
Q10) What is the difference between negative reinforcement and punishment?
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Chapter 11: Human Resources Management
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Q1) ________ refers to a state of physical and emotional exhaustion that can result from constant exposure to stress over a long period of time.
A) Worker buyout
B) Discrimination
C) Employee burnout
D) Work-life balance
E) Ergonomic stress
Q2) Workforce analytics are a computer-based statistical approach to analyzing and planning for workforce needs.
A)True
B)False
Q3) Which of the following acts prohibits any form or testing that can be construed as a preemployment medical examination?
A) the Taft-Hartley Act
B) the Landrum-Griffin Act
C) the Wagner Act
D) Americans with Disabilities Act
E) Fair Labor Standards Act
Q4) Compare and contrast retirement plans with pension plans.
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Chapter 12: Labor Relations
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Sample Questions
Q1) Compare and contrast mediation and arbitration.
Q2) Explain the benefits of unionization.
Q3) Authorization cards are cards signed by employees to indicate interest in having a union represent them.
A)True
B)False
Q4) 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
Q5) Labor unions place a high priority on ________.
A) increasing organizational productivity
B) engaging in disciplining procedures
C) recruiting and retaining members
D) keeping operational costs low
E) attaining operational flexibility in the organization
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Chapter 13: The Art and Science of Marketing
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Q1) Strategic marketing planning refers to the process of examining an organization's current marketing situation,assessing opportunities and setting objectives,and then developing a marketing strategy to reach those objectives.
A)True
B)False
Q2) ________ utility is the benefit provided by making the company's products available where customers want to purchase them.
A) Form
B) Possession
C) Value
D) Place
E) Time
Q3) When you segment a market using psychographics,you subdivide your customers according to characteristics such as their ________.
A) gender
B) ethnic group
C) self-concept
D) counties
E) occupation
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Page 15
Chapter 14: Product and Pricing Strategies
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Q1) Capital items are less expensive than expense items.
A)True
B)False
Q2) Explain loss-leader pricing.
Q3) ________ are fairly important individual goods and services that people buy less frequently.
A) Convenience products
B) Expense items
C) Specialty products
D) Capital items
E) Shopping products
Q4) A license is an agreement to produce and market another company's product in exchange for a royalty or fee.
A)True
B)False
Q5) Optimal pricing is a computer-based pricing method.
A)True
B)False
Q6) Compare and contrast auctions and participative pricing.
Q7) Explain how a business analysis is carried out.
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Chapter 15: Distribution and Marketing Logistics
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Q1) Because grocery stores have limited shelf space for products,they often require a(n)________ from producers before they will agree to carry a new,unproven product.
A) space allotment
B) slotting allowance
C) channel conflict allowance
D) opportunity cost
E) bandwidth payment
Q2) Like wholesalers,retailers face the threat of disintermediation if suppliers or customers don't think they add sufficient value or if other types of retailers can do the job better.
A)True
B)False
Q3) A slotting allowance is a payment to a retailer in exchange for carrying a producer's products for an agreed-upon length of time.
A)True
B)False
Q4) Compare and contrast wholesalers with retailers.
Q5) Compare and contrast intensive distribution with selective distribution.
Q6) Compare and contrast order processing with warehousing.
Page 17
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Chapter 16: Customer Communication
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Q1) The chief downside of trade allowances is that they can lead to ________,in which the retailer buys a large quantity of a product when the price is low,thus reducing the producer's profit in the long run.
A) push marketing
B) forward buying
C) slotting allowances
D) viral marketing
E) pull strategies
Q2) Discuss the three trends that are likely to shape advertising media in the coming years.
Q3) Bell Laboratories,a pharmaceutical company,launches a new,over-the-counter drug for pain relief.The firm supplies the new drug to pharmacies and physicians at a discounted rate to encourage the retailers to carry the new product.In this example,Bell Laboratories uses which of the following promotional strategies?
A) point-of-purchase displays
B) product placement
C) conversation marketing
D) trade allowances
E) premiums
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Page 18
Chapter 17: Financial Information and Accounting Concepts
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Sample Questions
Q1) Independent accounting firms that provide auditing services for public companies are called ________.
A) forensic auditors
B) external auditors
C) cost accountants
D) domestic auditors
E) financial analysts
Q2) A company has $20,000 cash and $100,000 worth of land.Other assets of the company amount to $300,000.The firm has an outstanding loan of $200,000 and other liabilities adding up to $25,000.What is the owner's equity of the company?
A) $395,000
B) $95,000
C) $195,000
D) $175,000
E) $220,000
Q3) Compare and contrast different types of financial ratios.
Q4) Balance sheet presents a firm's financial position on a particular date.
A)True
B)False
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Chapter 18: Financial Management
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Q1) Term loans have maturities between three months to one year.
A)True
B)False
Q2) A company sells its accounts receivable to an intermediary.The intermediary collects the receivables from the customer.This is an example of ________.
A) an unsecured loan
B) factoring
C) trade credit
D) a secured loan
E) a commercial paper
Q3) ________ are unsecured bonds,backed only by the corporation's promise to pay.
A) Convertible bonds
B) Protected bonds
C) Bills of exchange
D) Debentures
E) Non-convertible bonds
Q4) Revenue obtained through selling assets is an example of an external source of income.
A)True
B)False
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Chapter 19: Financial Markets and Investment Strategies
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Q1) A company's price/earnings ratio is determined by dividing the market value per share by the earnings per share.
A)True
B)False
Q2) During a bear market,most stocks increase in value.
A)True
B)False
Q3) Stocks that are purchased primarily for dividend payouts rather than capital gains potential are known as ________ stocks.
A) blue chip
B) growth
C) income
D) penny
E) defensive
Q4) Suppliers use futures contracts to protect themselves from future price decreases.
A)True
B)False
Q5) What are derivatives?
Q6) Describe the different order types you can use when you buy or sell a stock.
Page 21
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Chapter 20: The Money Supply and Banking Systems
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Q1) The Federal Reserve establishes the federal funds rate and influences the money supply by buying and selling Treasuries (negotiable U.S.Government debt obligations)in the open market.If the Fed buys Treasuries,the money supply will ________ and the federal funds rate will ________.
A) decrease, decrease
B) decrease, increase
C) increase, stabilize
D) increase, decrease
E) stabilize, increase
Q2) EBL is a financial institution headquartered in Rochester,New York.Membership in EBL is open to residents of Rochester and is financed by the members themselves.EBL accepts deposits from its members and provides loans to its members.EBL provides a low-cost finance option to the residents of Rochester.EBL is a ________.
A) loan association
B) retail bank
C) credit union
D) thrift bank
E) merchant bank
Q3) Compare and contrast federal funds rate and discount rate.
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Page 22