Business in Action, 6E
By Courtland L. Bovee
Email: richard@qwconsultancy.com
Business in Action, 6e (Bovee/Thill) Chapter 1 Developing a Business Mindset 1) Business is any profit-seeking organization that provides goods and services designed to satisfy customers' needs. Answer: TRUE Explanation: In a general sense business can be defined as any profit-seeking organization that provides goods and services designed to satisfy customers' needs. Page Ref: 3 Difficulty: Easy Chapter LO: 1 Classification: Concept 2) Profit refers to the money the company brings in through the sale of goods and services. Answer: FALSE Explanation: Profit is the amount of money left over after expenses–all the costs involved in doing business–have been deducted from revenue. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept 3) Businesses add value by transforming lower-value inputs (like paper and ink) into highervalue outputs (like textbooks). Answer: TRUE Explanation: Businesses add value by transforming lower-value inputs to higher-value outputs. In other words, they make goods and services more attractive from the buyer's perspective. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept 4) In a free-market economy, companies generally have limited autonomy in deciding which customers they want to focus on and how they want to compete. Answer: FALSE Explanation: In a free-market economy, companies generally have considerable freedom in deciding which customers they want to focus on and how they want to compete. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept
1 .
5) A company has competitive advantage when its products are more appealing to its chosen customers. Answer: TRUE Explanation: Competitive advantage makes a company's products or the company as a whole more appealing to its chosen customers. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept 6) Assets refer to the tangible economic resources owned by a firm. Answer: FALSE Explanation: Assets refer to anything of meaningful value, from patents and brand names to real estate and company stock. Page Ref: 4 Difficulty: Moderate Chapter LO: 1 Classification: Concept 7) A firm uses strategic sourcing techniques to reduce its costs. This is an example of barrier to entry. Answer: FALSE Explanation: Barrier to entry refers to any resource or capability a company must have before it can start competing in a given market. Page Ref: 6 Difficulty: Moderate AACSB: Analytic Skills Chapter LO: 1 Classification: Application 8) Difficulty in obtaining business permits or licenses to do a particular business would be an example of a barrier to entry for a firm. Answer: TRUE Explanation: Barrier to entry refers to any resource or capability a company must have before it can start competing in a given market. Page Ref: 6 Difficulty: Easy Chapter LO: 1 Classification: Concept
2 .
9) Intangible products have a physical presence. Answer: FALSE Explanation: Intangible products create value by performing activities that deliver some benefit to the customer. They do not have physical presence. Page Ref: 4 Difficulty: Easy Chapter LO: 1 Classification: Concept 10) The service sector now dominates the U.S. economy. Answer: TRUE Explanation: Over the past few decades, the U.S. economy has undergone a profound transformation from being dominated by manufacturing to being dominated by services. Page Ref: 5 Difficulty: Easy Chapter LO: 1 Classification: Concept 11) A business mindset is a view of business that considers the various decisions a business has to make as well as the challenges that it must overcome in order to be successful. Answer: TRUE Explanation: A business mindset is a view of business that considers the various decisions a business has to make as well as the challenges that it must overcome in order to be successful. Page Ref: 6 Difficulty: Easy Chapter LO: 2 Classification: Concept 12) Businesses can have both positive and negative effects on society. Answer: TRUE Explanation: The relationship between business and society is complex and far reaching. Businesses can have both positive and negative effects on society. Page Ref: 8 Difficulty: Easy Chapter LO: 2 Classification: Concept 13) Forces resulting from the practical application of science to a company's products and processes would best describe its social environment. Answer: FALSE Explanation: Every business operates within the broad social environment. Social environment refers to the trends and forces in society at large. Page Ref: 10 Difficulty: Easy AACSB: Dynamics of the Global Economy Chapter LO: 3 Classification: Concept 3 .
14) A firm sets up a paper manufacturing factory in a country which has very strict regulations regarding disposal of industrial waste. This increases the cost of production of the firm. This is an example of the social environment of the firm. Answer: FALSE Explanation: Every business operates within the broad social environment. Social environment refers to the trends and forces in society at large. Page Ref: 10 Difficulty: Moderate AACSB: Analytic Skills Chapter LO: 3 Classification: Application 15) The term stakeholders refers only to those people who have invested money in the company's stock. Answer: FALSE Explanation: All internal and external groups affected by a company's decisions and activities are referred to as its stakeholders. Page Ref: 10 Difficulty: Easy Chapter LO: 3 Classification: Concept 16) R&D fuels new ideas and designs for the company's products and services that allow it to meet customer needs in competitive markets. Answer: TRUE Explanation: R&D fuels new ideas and designs for the company's products and services that allow it to meet customer needs in competitive markets. Page Ref: 12 Difficulty: Easy Chapter LO: 4 Classification: Concept 17) Mark, who works for a toy manufacturing firm, is responsible for creating a branding and marketing strategy. He is most likely to be a part of the firm's operations management team. Answer: FALSE Explanation: A person responsible for a company's branding and marketing strategy will be part of strategic management rather than operations management. Page Ref: 12 Difficulty: Moderate AACSB: Analytic Skills Chapter LO: 4 Classification: Application
4 .