Type:
Test Bank
Resource:
Business and Its Environment
Edition:
6th Edition
Author(s):
David P. Baron
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
Chapter One Market and Nonmarket Environments True/False Questions: All companies are successful both in their markets and in the social, political and legal environment in which they operate. (ANSWER: F, p.1) 1)
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Nike, Microsoft, and Citigroup have encountered problems from both the competitive market as well as their nonmarket environment. (ANSWER: F, p.1) 3)
The nonmarket environment is characterized by the social, political, and legal arrangements that structure interactions outside of, but in conjunction, with markets and private agreements. (ANSWER: T, p.2) 4)
Effective management of both the market and the nonmarket environments is a necessary condition for the successful performance of the firm and all that is needed for victory over their competitors. (ANSWER: F, p.2) Nonmarket issues high on firms’ agendas include environmental protection, health and safety, regulation and deregulation, intellectual property protection, international trade policy, antitrust as well as other issues such as human rights. (ANSWER: T, p.2) 5)
6) Managers operate in both the market and nonmarket environments. (ANSWER: T, p.3) 7)
Successful management requires frameworks for analyzing nonmarket issues, principles for reasoning about them and strategies to address them. (ANSWER: T, p. 3) 8)
Managers rarely participate actively in the implementation of nonmarket strategies. (ANSWER: F, p.3) 9)
According to Robert Galvin, former leader at Motorola, companies must help shape the “rules of the game” in approaching its nonmarket environment. (ANSWER: T, p.4)
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Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
10)
In the case of agricultural biotechnology, the Environmental Protection Agency (EPA), the Centers for Disease Control, the Office of Homeland Security, the U.S. Department of Agriculture, the Congress, and the Food and Drug Administration were the primary government institutions involved. (ANSWER: F, p.5) 11) Innovation is one of the four I’s characteristic of the nonmarket environment. (ANSWER: F, p.5) 12) One of the issues facing the automobile industry is state CO2 regulations. (ANSWER: T, p. 6) The Korea-United States free trade agreement of 2007 increased Korea’s tariffs on automobile imports from the United States. (ANSWER: F, p.7) 13)
14)
General Motors received a perfect score for 2007 from the Human Rights Campaign, a gay rights organization. (ANSWER: T, p.7) 15)
The following are examples of NGOs who form an interest group for the automobile industry: Center for Auto Safety, Friends of the Earth, Sierra Club, AARP, Union of Concerned Scientists and the League of Women Voters. (ANSWER: F, p.9) 16)
The institutions in whose arenas the nonmarket issues for the automobile industry are addressed include the Presidency, the Environmental Protection Agency, and the commission of the European Union. (ANSWER: T, p.10) 17) Information is often at the heart of strategies for addressing nonmarket issues. (ANSWER: T, p.11) 18) Nonmarket issues come from both external forces and the firm’s actions. (ANSWER: T, p.11) 19)
Scientific discoveries and technological advances usually produce slight change in both market and nonmarket environments. (ANSWER: F, p.11)
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Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
20) The U. S. Supreme Court is not a part of nonmarket issues. (ANSWER: F, p.12) 21)
There is only one real approach to effectively managing nonmarket issues: responding to nonmarket issues only when they are strong enough to force the firm to act. (ANSWER: F, p.13) 22)
The Hallmark Graduation Cards situation was an example of seeing from the perspective of others the impact of a new line of cards—in this case, ones that would feature alcoholic beverages. (ANSWER: T, p.14) 23) The first step that a nonmarket issue passes through is issue identification. (ANSWER: T, p.14) 24) All nonmarket issues pass through all five phases. (ANSWER: F, p.15) 25)
The progress of a nonmarket issue is shaped by the actions taken toward that particular issue. (ANSWER: T, p.15) 26) Costs are a major concern for the pharmaceutical industry. (ANSWER: T, p.17) 27)
The drug companies are only impacted by federal regulations and not by state or local governments’ actions. (ANSWER: F, p.17) 28)
Patents provide the most important protection for intellectual property in the pharmaceutical industry. (ANSWER: T, p.19) 29)
When a drug company holds a patent in the US, no other country can produce that drug unless it changes some aspect, such as how it is manufactured, as India did. (ANSWER: T, p.19) Google is one company that stays out of harm’s way when dealing with interest groups over nonmarket issues by doing everything it does within guidelines that everyone accepts as the best. (ANSWER: F, p.25-32) 30)
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Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
Multiple Choice Questions: 31)
Of the following companies, which has had to deal with public concerns on a continuing basis? a) Google b) McDonald’s c) Nike d) Toyota (ANSWER: C, p.1) 32)
All but which one of the following makes public institutions different from markets. a) Due process b) Majority rule c) Bottom line concerns d) Collective action (ANSWER: C, p.2) 33)
Successful management needs which of the following? a) Frameworks for analyzing nonmarket issues b) Principles for reasoning about them c) Approaches for formulating strategies d) All are correct (ANSWER: D, p.3)
34)
Firms typically deal with nonmarket issues in ___________to their potential impacts on _________. a) Size; success b) Proportion; performance c) Finance; human resources d) The market; bottom line (ANSWER: B, p.3) 35)
Which of the following was not an environmental pressure brought about because of the Exxon Valdez oil spill? a) Liability for damages b) Increased human resource coordination c) More stringent regulations d) Direct public pressure (ANSWER: B, p.4)
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