Exercises prep for Mid terms
What Is a Business?
Choose correct option below
1. A _____ is an organized, profit-seeking activity that provides goods and services designed to
satisfy customers’ needs.
a) governmental group
b) charity
c) business
d) trade association
2. Museums, public schools and universities, symphonies, and libraries are examples of ______.
a) profit-seeking organizations
b) service businesses
c) goods-producing businesses
d) nonprofit organizations
3. A _____ business produces tangible goods by engaging in activities such as manufacturing,
construction, mining, and agriculture.
a) goods-producing
b) service
c) labor-intensive
d) wholesale
4. Which of the following is a capital-intensive business?
a) a computer consulting service
b) a furniture refinishing business
c) a pet-grooming service
d) an airline company
5. America Online, Nordstrom, Jiffy Lube, and eBay are examples of _____ businesses.
a) service
b) capital-intensive
c) goods-producing
d) manufacturing
6. Labor-intensive businesses rely more on _____ than buildings, machinery, and equipment to
prosper.
a) human resources
b) capital
c) technology
d) information
7. A consulting firm is heavily dependent on the knowledge and skills of its consultants. A group
of consultants can go into a business with little more than a few computers and some telephones.
What type of product does this firm produce?
a) tangible product
b) capital good
c) intellectual property
d) intangible product
8. Which of the following contributes to the continued growth of the service sector?
a) Consumers have less disposable income.
b) Technology has lowered barriers to entry.
c) Companies need less professional advice.
d) Demographic patterns and lifestyle trends are becoming more stable.
TRUE/FALSE QUESTIONS
What Is a Business?
9. Profit is the difference between a business’s revenues and its expenses.
10. All organizations exist to earn a profit.
11. All nonprofit organizations can learn from business opportunities, challenges, and activities
discussed in an introduction to business course.
12. The American Red Cross and the American Civil Liberties Union (ACLU) are examples of for-
profit organizations.
13. The service sector now accounts for only 30 to 40 percent of the nation’s output.
14. Capital-intensive manufacturing businesses generally have low barriers to entry.
15. Wal-Mart is now the world’s biggest corporation.
Ethics and Social Responsibility in Contemporary Business
16. _____ is the idea that business has certain obligations to society beyond the pursuit of profits.
a) Corporate social responsibility
b) Managerial ethics
c) Corporate philanthropy
d) Business ethics
17. Ethics is defined as ______.
a) the canons of moral behavior that are adopted by decision makers in an organization
b) the principles and standards of moral behavior that are accepted by society as right versus
wrong
c) the norms of behavior that each individual must follow to preserve social order
d) the application of moral standards to business situations
18. _____ is the application of moral standards to business situations.
a) Corporate social responsibility
b) Managerial ethics
c) Corporate philanthropy
d) Business ethics
19. Enron was once the nation’s seventh-largest company. It collapsed thanks to a complex stew of
hidden partnerships, management missteps, and insider trading. This case demonstrates a
situation in which Enron’s management _____.
a) failed to cover up their misdeeds
b) felt they were above the law
c) did not think through the consequences of their actions
d) did not shred the evidence before investigators’ probe
20. In order for a business to be considered ethical it must ______.
a) pursue profits and be a good citizen
b) not cause harm to others and pursue profits
c) compete fairly and honestly, communicate truthfully, and not cause harm to others
d) obey all laws and regulations
21. Proctor & Gamble (P&G) agreed to pay Unilever $10 million after P&G admitted to hiring
corporate spies to retrieve documents by rifling through Unilever’s trash bins. This practice is
commonly referred to as ______.
a) dumpster diving
b) tampering with trash
c) corporate espionage
d) trespassing
22. Buying or selling a company’s stock based on information that outside investors lack is known
as ______.
a) insider trading
b) creative accounting
c) misrepresentation
d) conflict of interest
23. Which of the following situations is an example of a conflict of interest?
a)
Company A purchases from Company B, which is owned or controlled by an executive
from Company A.
b)
Company A sells to Company B, which has no apparent ties to Company A.
c)
Company A offers a trade discount on goods bought by Company B, which is a standard
buying practice in the industry.
d)
Company B purchases all of its computer parts from Company C.
24.
Which of the following is a common factor that influences the ethical behavior of
businesspeople?
a)
labor unions
b)
cultural differences
c)
organizational structure
d)
organizational design
25. A written _____ defines the values and principles that should be used to guide decisions.
a)
code of conduct
b)
code of ethics
c)
code of honor
d)
code of law
26. ____ is an employee’s disclosure to the media or government authorities of illegal, unethical, or
harmful practices by the company.
a)
Writing a declaration
b)
Signing an affidavit
Filing a petition
Whistle-blowing
c)
d)
27. _____ is the resolution of ethical issues in a way that is consistent with those generally accepted
standards of right and wrong.
a)
Justice
b)
Utility
c)
Morality
d)
Caring
28. Which of the following is a consideration in determining the ethics of a situation?
a)
Will it be profitable?
b)
Is the decision balanced?
c)
Will management like it?
d)
Is the decision popular?
29. An approach that seeks the greatest good for the greatest number of people involved is called
_____.
a)
b)
c)
d)
utilitarianism
pragmatism
egalitarianism
equalitarianism
30. “Slamming” and “cramming” are examples of _____.
a)
ethical lapses
b)
ethical dilemmas
c)
deceptive selling practices
d)
anti-competitive business practices
31. A company continues to operate a facility even after the site has been proven unsafe. This is an
example of ____.
a)
an ethical dilemma
b)
an ethical lapse
c)
whistle-blowing
d)
respecting workers’ rights
32. In the 19th and early 20th centuries, the prevailing view among U.S. industrialists was that
business had only one responsibility:
a)
to act fairly.
b)
to obey the law.
c)
to pay taxes.
d)
to make a profit.
33. According to _____, the only social responsibility of business was to provide jobs and pay taxes.
a)
John Maynard Keynes
b)
Milton Friedman
c)
Adam Smith
d)
John Kenneth Galbraith
34. The Latin expression caveat emptor means
a)
let the buyer beware.
b)
that buyers are protected by the company.
c)
profits are less important than protecting consumers.
d)
profits are the stakeholders’ rewards.
35. According to one survey, _____ percent of business executives believe that companies should be
environmentally responsible.
a)
100
b)
90
c)
80
d)
70
36. If a company disregards society’s needs, what will be the most likely outcome?
a)
The company’s stock will show muscle.
b)
The voters will clamor for laws to limit the offensive business activities.
c)
The shareholders will rally around the company.
d)
The government will adopt a laissez-faire attitude.
37. Managers need to evaluate every situation within the context of the organization’s _____.
a)
moral personality
b)
moral fabric
c)
moral composition
d)
moral turpitude
Business’s Efforts to Increase Social Responsibility
38. A systematic evaluation and reporting of the company’s social performance is called a(n) _____.
a)
code of ethics
b)
affirmative action program
c)
performance evaluation
d)
social audit
39. _____ is a social responsibility effort in which a portion of product sales goes toward supporting
worthy causes.
a)
Public relations
b)
Marketing citizenship
c)
Cause-related marketing
d)
Community service
40. Pollution is _____.
a)
the unproductive use of land.
b)
the contamination of the natural environment by the discharge of harmful substances
c)
the effects of global warming
d)
the disappearance of the Brazilian rainforests
41. The study of the relationship between organisms and the natural environment is known as
_____.
a)
b)
c)
d)
etiology
entomology
enology
ecology
42. _____ is the federal government agency that, among other things, regulates air and water
pollution by manufacturers and utilities.
a)
EEOC
b)
OSHA
c)
EPA
d)
FDA
43. Global warming _____.
a)
is a gradual rise in average temperatures around the planet caused by increases in carbon
dioxide
b)
c)
d)
refers only to smog
refers to the next Ice Age
does not affect weather patterns
44. _____ is a movement that put pressure on businesses to consider consumer needs and interests.
a)
Boycotting
b)
Collective bargaining
c)
Consumerism
d)
Picketing
45. _____ announced a “bill of rights” for consumers.
a)
John F. Kennedy
b)
Richard M. Nixon
c)
Ronald Reagan
d)
Bill Clinton
46. A criminal activity in which criminals steal personal information and use it to take out loans and
commit other fraud is called _____.
a)
insider trading
b)
check kiting
c)
racketeering
d)
identity theft
47. _____ is the regulatory agency that battles job discrimination.
a)
EPA
b)
EEOC
c)
FTC
d)
FDA
48. _____ guarantees equal opportunities for people who have or have had a condition that might
handicap them.
a)
ADA
b)
EEOC
c)
FEMA
d)
DFEH
Ethics and Social Responsibility Around the World
49. In companies that do business globally, such as the Gap and Old Navy, corporate executives are
likely to face different cultural values and laws that
a)
make it harder to use practices illegal in their home countries.
b)
are always the same as those in their home countries.
c)
d)
create more complex issues of ethics and social responsibility
are easier to understand.
TRUE/FALSE QUESTIONS
Ethics and Social Responsibility in Contemporary Business
50. The terms social responsibility and ethics are interchangeable.
51. Ethics is the idea that business has certain obligations to society beyond the pursuit of profits.
52. Business ethics is the application of moral standards to business situations.
53. All businesses have the capacity to cause harm to their stakeholders.
54. The foundation of an ethical business climate is ethical awareness and clear standards of
behavior.
55. An ethical approach that seeks the greatest good for the greatest number of people involved is
socialism.
FILL IN THE BLANK QUESTIONS
Ethics and Social Responsibility in Contemporary Business
56. _____ is defined as the principles and standards of moral behavior that are accepted by society
as right versus wrong.
57. A written _____ defines the values and principles that should be used to guide decisions.
58. _____ is an employee’s disclosure to the media or government authorities of illegal, unethical,
or harmful practices by the company.
59. A(n) _____ is a situation in which one must choose between two conflicting but arguably valid
sides, while a(n) _____ is a situation in which one makes a decision that is clearly wrong.
Competing in the Global Economy
MULTIPLE CHOICE QUESTIONS
Fundamentals of International Trade
60. If a country can produce something more efficiently than every other country, or it has a natural
resource that no other country has, it enjoys a(n) _____.
a) absolute advantage
b) comparative advantage
c) competitive advantage
d) national competitive advantage
61. If South Korea can produce computer chips more efficiently and at lower cost than some other
countries, South Korea is said to have a(n) _____.
a) absolute advantage
b) comparative advantage
c) competitive advantage
d) national competitive advantage
62. According to the _____ theory, each country should specialize in those areas where it can
produce more efficiently than other countries.
a) absolute advantage
b) comparative advantage
c) competitive advantage
d) national competitive advantage
63. The total value of a country’s exports minus the total value of its imports, over some period of
time, determines its _____.
a) national debt
b) balance of payments
c) balance of trade
d) federal budget deficit
64. The total flow of money into the country minus the total flow of money out of the country over
some period of time is known as the _____.
a) balance of payments
b) balance of trade
c) balanced budget
d) balanced scorecard
65. Government policy aimed at shielding a country’s industries from foreign competition is known
as _____.
a) free trade
b) protectionism
c) fair trade
d) subsidies
66. _____ are taxes, surcharges, or duties levied against imported goods.
a) Quotas
b) Subsidies
c) Embargoes
d) Tariffs
67. A(n) _____ is a limit on the amount of a particular good that a country may import during a
given year.
a) embargo
b) quota
c) restrictive import standard
d) tariff
68. _____ are politically motivated embargoes that revoke a country’s normal trade relations status.
a) Quotas
b) Restrictive import standards
c) Sanctions
d) Tariffs
69. The practice of selling large quantities of a product at a price lower than the cost of production
or below what the company would charge in its home market is called _____.
a) dumping
b) setting quotas
c) imposing tariffs
d) establishing a cartel
70. Which of the following is a major international trade organization that unites nations around the
Pacific Rim to liberalize trade?
a) APEC
b) OSHA
c) IMF
d) World Bank
71. The _____ is a permanent forum for negotiating, implementing, and monitoring international
trade procedures and for mediating trade disputes among its member countries.
a) APEC
b) ASEAN
c) GATT
d) WTO
72. The primary function of the _____ is to provide short-term loans to countries that are unable to
meet budgetary expenses.
a) GATT
b) IMF
c) World Bank
d) WTO
73. _____ are organizations of nations that remove barriers to trade among their members and
establish uniform barriers to trade with nonmember nations.
a) Trading agreements
b) Trading blocs
c) Strategic alliances
d) Joint ventures
74. Which of the following is one of the most powerful trading blocs today?
a) EU
b) APEC
c) IMF
d) GATT
75. In 1994 the United States, Canada, and Mexico formed a powerful trading bloc known as _____.
a) ASEAN
b) EU
c) Mercosur
d) NAFTA
76. The _____ proposes to link the United States and five countries in Central America.
a) CAFTA
b) NAFTA
c) Mercosur
d) FTAA
77. The European Union was created to serve which of the following goals?
a) increasing local regulations related to trade
b) adopting a unified currency
c) adding protectionist measures that limit trade among member counties
d) maintaining different currencies
78. A unified currency used by most nations in the European Union is called the _____.
a) dollar
b) euro
c) pound
d) yen
79. The rate at which the money of one country is traded for the money of another is known as the
_____.
a) foreign exchange
b) floating exchange rate
c) exchange rate
d) fixed exchange rate
80. _____ is a move by one government to drop the value of its currency relative to the value of
other currencies.
a) Revaluation
b) Devaluation
c) Appreciation
d) Depreciation
The Global Business Environment
81. Assigning a wide range of generalized attributes (which are often superficial or even false) to an
individual on the basis of membership in a particular culture or social group is called _____.
a) ethnocentrism
b) stereotyping
c) labeling
d) profiling
82. _____ is the tendency to judge all other groups according to your own group’s standards,
behaviors, and customs.
a) Ethnocentrism
b) Stereotyping
c) Labeling
d) Racial profiling
83. The legal systems in the United States and the United Kingdom are based on _____.
a) civil law
b) administrative law
c) theocratic law
d) common law
84. _____ is the buying of goods or services from a supplier in another country, while _____ is the
selling of products outside the country in which they are produced.
a) Importing; exporting
b) Exporting; importing
c) Licensing; franchising
d) Franchising; licensing
85. A company that buys products for resale overseas as well as performs a variety of importing,
exporting, and manufacturing functions is called a(n) ______ .
a) franchiser
b) licensor
c) export management company
d) export trading company
86. A(n) _____ is a long-term partnership between two or more companies to jointly develop,
produce, or sell products in the global marketplace.
a) joint venture
b) international franchising
c) strategic alliance
d) international licensing
87. What U.S. federal law outlaws bribes to government officials with the intent of granting favors?
a) the FCPA
b) the FTAA
c) the FTZ
d) the ADA
88. A cooperative partnership in which organizations share investment costs, risks, management,
and profits in the development, production, or selling of products is known as a(n) _____.
a) transnational corporation
b) joint venture
c) strategic alliance
d) foreign direct investment
89. Companies with operations in more than one country are called _____.
a) foreign direct investment
b) strategic alliances
c) joint ventures
d) multinational corporations
Terrorism’s Impact on the Global Business Environment
TRUE/FALSE QUESTIONS
Fundamentals of International Trade
90. The main reason why nations trade is because no single country can produce everything its
citizens need or want at prices they are willing to pay.
91. In practice, most countries have an absolute advantage in one or more industries.
92. In general, the comparative advantage theory suggests that each country should specialize in
those areas where it can produce more efficiently than other countries.
93. When the people of the United States buy more from countries than the foreign countries buy
from the United States, the U.S. balance of trade is said to be positive.
94. In general, a trade surplus occurs when exports exceed imports.
95. The total value of a country’s exports minus the total value of its imports, over some period of
time, determines its balance of payments.
96. The balance of payments includes the balance of trade plus the net dollars received and spent on
foreign investment, military expenditures, tourism, foreign aid, and other international
transactions.
97. The most extreme form of a quota is an embargo.
98. Sanctions can include arms embargoes, foreign-assistance reductions and cutoffs, trade
limitations, tariff increases, import-quota decreases, visa denials, and air-link cancellations.
99. Farm subsidies are an accepted form of government payments to domestic producers.
100. Dumping is most often used to try to win foreign customers or to reduce product surpluses.
101. The World Trade Organization is a worldwide pact whose guiding principle is
nondiscrimination.
102. Unlike GATT, the WTO provides a formal legal structure for mediating international trade
disputes.
103. The Asia Pacific Economic Cooperation Council (APEC) is an organization of 18 countries that
is making efforts to liberalize trade in the Pacific Rim.
104. Trading blocs generally promote trade inside the region while creating uniform barriers against
goods and services entering the region from nonmember countries.
105. The four most powerful trading blocs today are the ASEAN, EU, NAFTA, and CAFTA.
106. When companies buy and sell goods and services in the global marketplace, they complete the
transaction by bartering.
INFORMATION TECHNOLOGY AND E-COMMERCE
MULTIPLE CHOICE QUESTIONS
From Data to Information to Insight
107. _____ are recorded facts and statistics, while _____ is useful knowledge.
a) Data; insight
b) Information; insight
c) Insight; data
d) Data; information
108. _____ is a deep level of understanding about a particular subject or situation.
a) Data
b) Information
c) Insight
d) Analysis
109. _____ are computerized files that collect, sort, and cross-reference data.
a) Donorbases
b) Databases
c) Directories
d) Data warehouses
110. A powerful computerized analysis technique that identifies previously unknown relations among
individual data points is called _____.
a) data mining
b) sifting
c) data warehousing
d) sorting
111. _____ are a subset of a data warehouse that extracts a focused block of data and information for
specific purposes, such as marketing and sales.
a) Virtual databases
b) Information systems
c) Database management systems
d) Data marts
112. A high-level executive responsible for understanding the company’s information needs and for
creating systems and procedures to deliver that information to the right people at the right time is
called a _____.
a) CIO
b) CFO
c) CAO
d) CEO
113. CIOs are expected to deliver quality information. This can be defined as _____.
a) relevant only to the management team
b) relevant, accurate, timely, and cost effective
c) relevant, accurate, and useful for planning purposes only
d) relevant, timely, and delivered at the lowest cost
114. _____ is a form of e-commerce involving interactions and transactions between companies and
consumers.
a) Business-to-business e-commerce
b) Business-to-consumer e-commerce
c) Consumer-to-consumer e-commerce
d) M-commerce
115. Purchasing ring tones for a cell phone is a good example of _____.
a) e-tailing
b) B2B
c) C2C
d) mobile commerce
116. _____ is working at home while staying connected to the office via electronic networking.
a) Telecommuting
b) Newsgroups
c) Extranets
d) Intranets
117. Real-time text conversations between computers are known as _____.
a) intranets
b) extranets
c) e-mailing
d) instant messaging
118. Richard sells educational software to colleges located nationwide and is frequently away from
his home office. Thanks to technology, Richard is able to communicate with his office by
______.
a) PDA and cell phone
b) e-tailing
c) C2C
d) D2D
119. _____ are discussion groups to which a subscriber sends a message to the list’s e-mail address,
whereas _____ consist of posted messages on a particular subject and the response to them.
a) Intranets; extranets
b) Mail server lists; newsgroups
c) Extranets; intranets
d) Newsgroups; mail server lists
120. _____ are websites that are accessible by employees only, while _____ are websites that allow
trusted outside business partners to log on as well as employees.
a) Intranets; extranets
b) Shared workspaces; extranets
c) Internet telephony; wikis
d) Blogs; virtual offices
121. Small, invitation-only networks that are typically more secure than other networks are called
_____.
a) portals
b) VoIPs
c) wikis
d) darknets
122. Which of the following is a good tip to make the best use of any search engine or database?
a) Start filling in the blanks, as the instructions are all alike.
b) Adjust the scope of your search if needed.
c) Stick to the scope of your search.
d) They all work the same way.
123. _____ takes advantage of information technology, particularly the Internet, across all major
business functions.
a) Really Simply Syndication
b) Artificial intelligence
c) E-business
d) Digital convergence
TRUE/FALSE QUESTIONS
From Data to Information to Insight
124. Data and information are interchangeable terms.
125. No single technology in recent decades has reshaped the business world as much as the Internet
has.
126. Amazon.com and eBay are well-known symbols of the pre-Internet Age.
127. E-tailing is a form of e-commerce involving a company and its suppliers, distributors,
manufacturers, retailers, and other corporate customers, but not individual consumers.
128. Both intranets and extranets are sometimes called portals.
129. Search engines are able to reach the content held in limited-access collections, such as the back
issues of many newspapers, magazines, and professional journals.
130. Dogpile.com and Mamma.com are examples of the more popular metacrawlers.
131. The most basic form of searching is a keyword search, in which the engine or database attempts
to find items that include all of the words entered.
132. RSS stands for repetitive search system.
FORMS OF BUSINESS OWNERSHIP
MULTIPLE CHOICE QUESTIONS
Choosing a Form of Business Ownership
133. A(n) _____ is a written document that states all the terms of operating the partnership by
spelling out the partners’ rights and responsibilities.
a) partnership agreement
b) user agreement
c) licensing agreement
d) rental agreement
134. A _____ is a legal entity, distinct from any individual persons, with the power to own property
and conduct business.
a) corporation
b) general partnership
c) limited partnership
d) sole proprietorship
135. A corporation ______.
a) has unlimited liability
b) dissolves automatically upon the death of the CEO
c) be formed easily
d) can sue and be sued
136. The corporation is owned by its _____.
a) officers
b) board of directors
c) shareholders
d) creditors
137. Most stock issued by corporations is _____.
a) preferred stock
b) bonds
c) common stock
d) mutual funds
138. Mark receives a distribution from one of the stocks he holds in his portfolio. These payments are
called _____.
a) futures
b) commodities
c) earnings
d) dividends
139. Selling stock to the public is:
a) made easier by the SEC.
b) a way to raise funds, although it means diluting ownership.
c) a good low-cost solution to raising funds.
d) a good way to avoid accountability for profits.
140. _____ is the level of ease with which an asset can be converted to cash.
a) Leverage
b) Trading
c) Liquidity
d) Investing
141. A(n) _____ is a special type of parent company that owns other companies for investment
reasons and usually exercises little operating control over those subsidiaries.
a) subsidiary corporation
b) holding company
c) foreign corporation
d) alien corporation
142. A corporation that is incorporated in Delaware but does business in surrounding states is a(n)
_____ corporation.
a) alien
b) domestic
c) foreign
d) holding
143. The term _____ can be used in a broad sense to describe all the policies, procedures,
relationships, and systems in place to oversee the successful and legal operation of the
enterprise.
a) corporate governance
b) corporate policy
c) corporate oversight
d) corporate strategy
144. Which of the following is a chief responsibility of a board of directors?
a) writing the sexual harassment policy
b) hiring new presidents
c) making marketing program decisions that will affect the company's profits
d) managing the productivity of the company
145. Hoping to cash in on the rise in the value of an Internet-based company stock, Allan purchases
stock in an online bookstore. Allan is now a _____.
a) limited partner
b) shareholder
c) director
d) general partner
146. Shareholders of a company should recognize that they _____.
a) will always get a dividend
b) will not lose their investment if the company fails
c) have unlimited liability if the company fails
d) risk losing the amount invested, but no more
147. Angela owns common stock in Medieval, Inc. She is unable to make the annual shareholders
meeting. In this case, Angela is likely to _____.
a) vote by proxy
b) send an email stating her wishes to the corporate headquarters
c) call the corporate headquarters with instructions on how to vote for her
d) ask to have the shareholders meeting rescheduled for a more convenient time
148. An example of an institutional investor is a(n) ______ .
a) individual who invests his own money
b) small, privately held company
c) college savings account
d) pension fund
149. The _____ is responsible for declaring dividends, guiding corporate affairs, reviewing long-term
strategic plans, selecting corporate officers, and overseeing financial performance.
a) board of directors
b) chief executive officer
c) chief financial officer
d) chief operations officer
150. How many members typically make up a board of directors for a traditional corporation?
a) 3 to 5
b) 5 to 10
c) 10 to 15
d) 15 to 25
Understanding Business Combinations
151. In a(n) _____, two companies join to form a single entity, while a(n) _____ occurs when one
company buys controlling interest in the voting stock of another company.
a) merger; acquisition
b) acquisition; merger
c) merger; consolidation
d) acquisition; consolidation
152. In a(n) _____, two companies create a new, third entity that then purchases the two original
companies.
a) acquisition
b) consolidation
c) divesture
d) leveraged buyout
153. When one or more individuals purchase a company or company division using borrowed funds
guaranteed by the assets of the company they are buying, the purchasers are engaging in a
_____.
a) divestiture
b) leveraged buyout
c) hostile takeover
d) consolidation
154. A _____ merger occurs when a company purchases a complementary company at a different
level in the “value chain.”
a) horizontal
b) conglomerate
c) market extension
d) vertical
155. Kmart acquired Sears in the hopes of competing more effectively against Wal-Mart. This is an
example of a _____ merger.
a) vertical
b) conglomerate
c) horizontal
d) market extension
156. Bank of America gained instant presence in the Northeast when it acquired FleetBoston. This is
an example of a _____ merger.
a) product extension
b) market extension
c) horizontal
d) conglomerate
157. Which of the following is a reason why companies pursue mergers and acquisitions?
a) economies of reduction
b) to increase structures
c) reductions in efficiency
d) synergies
158. During the _____, a merger boom occurred, which was fueled by the rapid price increases in the
dot-com and other technology stocks.
a) 1960s
b) 1970s
c) 1980s
d) 1990s
159. _____ occurs when stronger players acquire smaller, weaker players and thereby reduces the
number of suppliers left in the market.
a) Industry fragmentation
b) Industry consolidation
c) Consolidation
d) Concentration
160. The buyer in a hostile takeover is commonly referred to as a_____.
a) shark
b) greenmailer
c) white knight
d) raider
161. In a(n) _____, the buyer tries to convince enough shareholders to go against management and
vote to sell.
a) leveraged buyout
b) initial public offering
c) buy-in
d) hostile takeover
162. In a _____, the raider launches a public relations battle for shareholder votes, hoping to enlist
enough votes to oust the board and management.
a) tender offer
b) proxy fight
c) takeover
d) buyout
163. A company plans a special sale of newly issued stock to current stockholders at prices below the
market value of the company’s existing stock. This is an example of a _____.
a) tender offer
b) shark repellent
c) white knight
d) poison pill
164. A direct tactic requiring that stockholders representing a large majority of shares approve any
takeover attempt is called _____.
a) golden parachute
b) poison pill
c) shark repellent
d) white knight
165. Southwest Airlines and Yahoo! are among the companies whose shareholders have been trying
to convince management to drop _____.
a) management buyouts
b) poison pills
c) shark repellent
d) golden parachutes
166. A _____ is a long-term partnership between companies to jointly develop, produce, or sell
products, while a _____ is a separate legal entity established by the strategic partners.
a) joint venture; strategic alliance
b) strategic alliance; license
c) joint venture; divestiture
167. A goal of strategic alliances is:
a) to help a company lose credibility in a new field.
b) to reduce and focus its market presence.
c) to ensure a better return for investors.
d) to limit offerings.
168. In the information technology business, computer giant IBM and Cisco struck a _____ in order
to supply Internet telephony and video solutions.
a) strategic alliance
b) joint venture
c) merger
d) none of the above
169. In one survey, participants in strategic alliances said _____ percent of the arrangements
were complete failures.
a) 20
b) 30
c) 40
d) 50
TRUE/FALSE QUESTIONS
Choosing a Form of Business Ownership
170. The three most common forms of business ownership are sole proprietorships, partnerships, and
mergers.
171. A sole proprietorship is a business solely owned and run by one person, with no staff support.
172. Profits from sole proprietorships and from partnerships are taxed at individual income tax rates
rather than higher corporate rates.
173. The biggest drawback of a sole proprietorship is lack of continuity.
174. In a general partnership, all partners are considered equal by law, and all are liable for the
business’s debts.
175. The limited liability partnership was invented to protect members of partnerships from being
wiped out by claims against their firms.
176. Electing a managing partner to lead a general partnership can diminish the potential for
interpersonal conflict within the organization.
177. U.S. law requires a written partnership agreement for all types of partnerships.
178. The modern corporation evolved in the 19th century when capitalists needed large sums of
money to build railroads and steel mills.
179. People and corporations have the same legal attributes.
180. The corporation is solely owned by institutional investors.
181. Most stock issued by corporations is preferred stock
182. The stock owned by Kinko’s and FedEx is held by only a few individuals or companies and is
not publicly traded.
183. Doctors, lawyers, and some other professionals often join forces in a special type of private
corporation called a professional corporation.
184. Closed corporations are more vulnerable to unwelcome takeover attempts than are public
corporations.
185. The primary reason for “going public” is to reduce the power of top management and to spread
investment risk among more shareholders.
186. Corporations seeking “S” status must have more than 75 investors but less than 90 investors,
none of whom may be nonresident aliens.
187. A limited liability company has many similarities but more restrictions than an S corporation.
188. The term corporate governance can be used in the broad sense to describe all the policies,
procedures, relationships, and systems in place to oversee the successful and legal operation of
the enterprise.
189. The board of directors in a corporation numbers up to a maximum of 20 members.
190. Institutional investors now own half the stock in U.S. corporations.
191. Sarbanes-Oxley requires that the majority of directors be insiders so they may lend a deeper
understanding of the inner workings of the organization in order to make informed decisions.
ENTREPRENEURS AND SMALL BUSINESS OWNERS
MULTIPLE CHOICE QUESTIONS
Understanding the World of Small Business
192. The U.S. Small Business Administration currently defines a small business as a firm that _____.
a) is independently owned and operated, is not dominant in its field, is relatively small in terms
of annual sales, and has fewer than 500 employees
b) is set up as a sole proprietorship
c) has fewer than 500 employees
d) has sales of less than $1 million
193. According to the U.S. Small Business Administration’s definition of small business, the U.S. is
home to approximately _____ small businesses.
a) 13 million
b) 23 million
c) 33 million
d) 43 million
194. According to the Small Business Administration's definition of small business, which of the
following is a characteristic of a small business?
a) It employs fewer than 500 workers.
b) It is owned and operated by shareholders.
c) It is dominant in its field.
d) Its revenues are relatively large.
195. The SBA reports that _____ percent of all U.S. companies have annual sales of less than $1
million.
a) 30
b) 60
c) 80
d) 90
196. About 60 percent of the nation’s employers have fewer than _____ workers.
a) 5
b) 50
c) 500
d) 5000
197. Of the following, which is an important role played by small businesses in the U.S. economy?
a) They trade on the New York Stock Exchange.
b) They introduce new products.
c) They reduce the need for equal opportunity legislation.
d) They assist the federal government in making transfer payments.
198. Which of the following is an important role played by small businesses in the economy?
a) They provide affordable, mass-produced items more efficiently than big businesses.
b) They provide jobs.
c) They reduce the scope of products and markets.
d) They increase the employees needed by larger organizations.
199. Small businesses supply the needs of large corporations by _____.
a) hiring their workers.
b) insourcing.
c) serving as a supplier and/or distributor
d) increasing the number of employees they need.
200. Which of the following is a major difference between small and large companies?
a) Small businesses have the freedom to innovate and move quickly.
b) Large businesses get by with limited resources.
c) Most small firms have a broader focus.
d) Most small firms offer more goods and services to more market segments.
201. Greg has a small woodshop in his garage where he makes picture frames and boxes to order.
His business is built around the personal and financial needs of his family. In this case, Greg is
running a(n) _____.
a) incubator
b) quick-flip business
c) high-growth venture
d) lifestyle business
202. A factor contributing to the increase in the number of small businesses today is:
a) fewer minority entrepreneurs.
b) decreasing numbers of women in the workforce.
c) corporate downsizing.
d) trend away from outsourcing.
203. Many large companies and individuals within companies try to duplicate the entrepreneur’s
innovative spirit through a process known as _____.
a) intrapreneurship
b) incubators
c) vestibules
d) simulations
204. Which of the following has contributed to the increase in the number of small businesses today?
a) the increased number of women and minorities starting their own business
b) corporate growth and hiring
c) decreasing diversity in entrepreneurship
d) corporate labor shortages
205. Women now own some _____ million businesses in the U.S.
a) 8
b) 9
c) 10
d) 11
206. Many women start their own business because of a barrier to corporate advancement, known as
_____.
a) sexism
b) inequity
c) the glass ceiling
d) the old-boy’s network
207. Between 1987 and 1997, the number of firms owned by minorities grew _____ percent.
a) 138
b) 148
c) 158
d) 168
208. Those people born between 1965 and 1980, the so-called _____, now start some 70 percent of
all new businesses.
a) Baby Boomers
b) Generation X
c) Generation Y
d) the Millennials
209. When the economy sours, business start-ups _____.
a) increase dramatically
b) remain unchanged
c) decrease slightly
d) shift erratically
Starting a Small Business
210. Which of the following is a typical characteristic of entrepreneurs?
a) They dislike risk.
b) They lack self-confidence.
c) They like working for someone else.
d) They like to control their destiny.
211. Which of the following statements about entrepreneurs is false?
a) They are highly disciplined.
b) They have a high degree of confidence.
c) They have tunnel vision.
d) They are willing to exploit new opportunities.
212. A _____ is a written document that provides an orderly statement of a company’s goals and a
plan for achieving those goals.
a) launch plan
b) strategic plan
c) marketing plan
d) business plan
213. Roughly _____ of business founders begin start-up companies.
a) one-quarter
b) one-third
c) two-thirds
d) one-half
214. _____ are new business ventures started from scratch.
a) Incubators
b) Start-up companies
c) Franchises
d) Cooperatives
215. If you decide to take the risk, you can get into business for yourself by _____.
a) selling a franchise
b) working in an existing business
c) starting from scratch
d) letting others do most of the work
216. Which of the following small-business ownership options tends to reduce risks?
a) forming a cooperative
b) obtaining a franchise
c) buying an existing business
d) starting from scratch
217. A business arrangement in which a small business obtains rights to sell the goods or services of
the supplier is called a(n) _____.
a) licensing arrangement
b) franchise
c) incubator
d) cooperative
218. A small-business owner who contracts for the right to sell goods and services of the supplier in
exchange for some payment is called the _____.
a) franchisee
b) franchise
c) franchisor
d) contractor
219. Mark wishes to start a small business. He would prefer to use a larger company’s trade name and
sell its products or services in a specific territory. Which small-business ownership option
should Mark select?
a) joining a cooperative
b) starting from scratch
c) obtaining a franchise
d) buying an existing business with no big company affiliation
220. Car dealerships and gasoline stations fall into which franchise category?
a) business-format franchise
b) manufacturing franchise
c) wholesaling franchise
d) product franchise
221. Fast-food chains like Taco Bell or Kentucky Fried Chicken fall into which franchise category?
a) business-format franchise
b) manufacturing franchise
c) wholesaling franchise
d) product franchise
222. A soft-drink bottling plant is an example of a_____.
a) business-format franchise
b) manufacturing franchise
c) wholesaling franchise
d) product franchise
223. A _____ is a legally binding contract that defines the relationship between the franchisee and the
franchisor.
a) confidentiality agreement
b) nondisclosure agreement
c) franchise agreement
d) rental agreement
224. Royalty fees vary from nothing to _____ percent of sales.
a) 20
b) 15
c) 10
d) 5
225. Which of the following is considered helpful for prospective franchisees?
a) knowing they can easily learn the day-to-day business
b) believing the name recognition alone will bring success
c) consulting an attorney
d) understanding they will have a consistently positive cash flow
226. Which of the following would be a disadvantage when franchising?
a) market research
b) complete independence
c) training
d) technical assistance
227. Which of the following are offered in newer franchise contracts?
a) franchise boards
b) stock options
c) automatic contract cancellations
d) regular annual increases in royalty payments
228. One report on small-business failure rates reveals that the chance of succeeding is only one in
_____.
a) four
b) five
c) six
d) seven
229. Some experts claim that up to 85 or 90 percent of all new business ventures fail within _____
years.
a) 5
b) 7
c) 9
d) 10
230. A reason why many businesses fail is:
a) lack of management skills.
b) experience in a similar business.
c) too much time at work.
d) lack of proper academic credentials.
231. Which of the following is a source of small-business assistance?
a) HIRT
b) advising codes
c) colleges and universities
d) CTO
232. Some of the best advice available to small business comes from a resource partner of the Small
Business Administration, the thousands of volunteers at _____.
a) CBO
b) SCORE
c) BLS
d) HUD
233. ____ are centers that provide “newborn” businesses with just about everything a company
needs to get started.
a) Incubators
b) The Internet
c) Small Business Compliance Assistance
d) Occupational Health and Safety Administration
TRUE/FALSE QUESTIONS
Understanding the World of Small Business
234. Small businesses are the cornerstone of the U.S. economic system.
235. Small businesses generate about one-third of private sector output.
236. The U.S. Small Business Administration currently defines a small business as a firm that is
independently owned and operated, is not dominant in its field, is relatively small in terms of
annual sales, and has fewer than 50 employees.
237. If U.S. small businesses were a separate country, they would constitute the third-largest
economy in the world.
238. In the past few years, a new subcategory of high-growth venture has emerged called the quick-
flip start-up.
239. Lifestyle businesses are built around the personal and financial needs of an individual or a
family.
240. FedEx, Microsoft, and Papa John’s are examples of high-growth ventures, as they started out as
small entrepreneurial firms but quickly outgrew their small-business status.
241. Young people are one of the strongest forces in entrepreneurship today.
242. Small-business growth is being fueled more by corporate refugees than by women and
minorities.
243. Business start-ups only increase when the economy is healthy, and they decrease when the
economy sours.
244. To make up for layoffs of permanent staff, some companies outsource or subcontract special
projects and secondary business functions to experts outside the organization.
Starting a Small Business
245. Successful entrepreneurs tend to be compulsive gamblers who thrive on high-risk situations.
246. Jeff Bezos, founder of Amazon.com, planned the world’s first online bookstore in the backseat
of his car as his wife drove them from New York to Seattle.
247. A business plan is a written document that summarizes an entrepreneur’s proposed business
venture, communicates the company’s goals, highlights how management intends to achieve
those goals, and shows how customers will benefit from the company’s products or services.
248. Roughly one-third of business founders begin start-up companies.
249. In a franchise, the franchisee (supplier) grants a franchise to an individual or group (franchisor)
in exchange for payments.
250. A Chevron service station and a Ford dealership are examples of product franchises.
251. Since 1978 the Small Business Administration has required franchisors to disclose information
about their operations to prospective franchisees.
252. One of the biggest disadvantages of franchising is the monthly payment, or royalty, that must be
turned over to the franchisor.
253. Franchisees enjoy the same degree of autonomy that other entrepreneurs take pleasure in.
254. Although some analysts estimate that 85 percent of all new businesses fail, the true failure rate is
much lower if one removes those operations that business analysts say are not “genuine
businesses."
255. The number one reason for business failure is growing too quickly.
256. Most local business professionals are hesitant to serve as mentors to new small-business owners.
257. Service Corps of Retired Executives is a resource partner of the Small Business Administration.
258. Nationwide, the success rate of incubators is extremely high, as nearly 90 percent of companies
that are graduates from incubators are still in business.
259. The Internet is a limited source of small-business assistance.
The Functions of Management
MULTIPLE CHOICE QUESTIONS
The Four Basic Functions of Management
260. The four major functions of management include planning,, _____, leading, and _______.
a) controlling; delegating
b) evaluating; judging
c) organizing; controlling
d) communicating; delegating
261. Management is _____.
a) the process of coordinating resources to meet organizational goals
b) the process by which managers determine the organizational structure of the firm
c) the process of recruiting and selecting qualified individuals for vacant posts
d) the systematic analysis of strategic goals used for long-term planning
262. Which of the following is a formal role played by managers?
a) conceptual roles
b) organizing roles
c) decisional roles
d) technical roles
263. _____ are behavioral patterns associated with or expected of certain positions.
a) Responsibilities
b) Cultural styles
c) Roles
d) Lines of authority
264. _____ involves establishing objectives and goals for an organization and determining the best
ways to accomplish them.
a) Organizing
b) Planning
c) Leading
d) Controlling
265. _____ outline the firm’s long-range organizational goals and set a course of action the firm will
pursue to reach its goals.
a) Operational plans
b) Strategic plans
c) Tactical plans
d) Contingency plans
266. What is the time interval used for long-range organizational goals used in strategic planning?
a) 1–2 years
b) 2–5 years
c) 5–10 years
d) 10–20 years
267. A _____ is a clear, simple outline of how the business intends to generate revenue.
a) strategic plan
b) business model
c) tactical plan
d) mission statement
268. A vital step in the strategic planning process is:
a) developing a clear vision
b) creating an orientation.
c) knowing production capacity.
d) establishing a recruitment plan.
269. A _____ is a realistic and achievable view of the future that grows out of and improves on the
present.
a) mission
b) vision
c) forecast
d) goal
270. To translate a vision into reality, managers must define specific organizational _____.
a) goals
b) roles
c) control systems
d) rituals
271. The statement of the organization’s purpose, basic goals, and philosophies is called a _____.
a) mission statement
b) vision statement
c) business strategy
d) corporate strategy
272. Which of the following is a component of a mission statement?
a) the company’s product or service
b) a market research plan
c) marketing mix strategies
d) managerial hiring policies
273.
SWOT stands for _____.
a) strengths, weaknesses, opportunities, and threats
b) strengths, weaknesses, operations, and threat
c) strengths, weaknesses, offerings, and threats
d) substitutions, weaknesses, offerings, and threats
274.
____ are positive internal factors that contribute to a company’s success, whereas
_____ are
negative internal factors that inhibit the company’s success.
a) Opportunities; weaknesses
b) Opportunities; threats
c) Strengths; weaknesses
d) Strengths; threats
275.
A _____ is a bundle of skills, technologies, and other resources that enable a company
to provide a particular benefit to customers.
a) distinctive competency
b) competitive advantage
c) market advantage
d) core competency
276.
Dell’s rapid assembly of highly customized computers is one of its _____.
a) core competencies
b) distinctive competencies
c) market advantages
d) competitive advantages
277.
_____ are positive external situations that represent the possibility of generating new
revenue,
whereas _____ are negative forces that could inhibit the firm’s ability to achieve its objectives.
a) Opportunities; weaknesses
b) Opportunities; threats
c) Strengths; weaknesses
d) Strengths; threats
278.
IBM is currently pushing Linux operating system over Microsoft’s Windows operating
system.
From Microsoft’s point of view, IBM’s action poses a(n) _____.
a) threat
b) opportunity
c) weakness
d) strength
279.
Maria works in the marketing department of a computer manufacturer. She must make\
predictions about industry trends and developments. What activity is Maria engaged in?
a) strategic planning
b) tactical planning
c) contingency planning
d) forecasting
280.
Susan is given a small sum of money and asked to bet on the likelihood of various
outcomes.
This is an example of a method known as a _____.
a) quantitative forecast
b) prediction market
c) qualitative forecast
d) stock market speculation
281.
.A small stationery store is competing against a big-box office supplies store in the local
market. The stationery store owner is proud of the store’s heritage of service quality. The store
owner should use a ____ strategy to compete against the big-box office supplies store.
a) cost leadership
b) focus
c) market leadership
d) differentiation
282.
Wal-Mart keeps prices low by continually squeezing inefficiencies out of its operations
and those of its suppliers. Wal-Mart is using a _____ strategy.
a) cost leadership
b) market leadership
c) focus
d) differentiation
283.
When using a _____ strategy, companies concentrate on a specific segment of the
market, seeking to develop a better understanding of those customers and to tailor products
specifically
to their needs.
a) differentiation
b) market leadership
c) focus
d) cost leadership
284.
In business terms, a(n) _____ is a broad, long-range accomplishment, whereas a(n)
_____ is a
specific, short-range target.
a) goal; objective
b) objective; goal
c) objective; task
d) task; goal
285.
For Dell, a(n) _____ might be to capture 10 percent of the U.S. market for flatscreen TVs over the next five years, and a(n) _____ might be to sell 500,000 laptop computers
in the U.S. in the next 12 months.
a) goal; objective
b) objective; goal
c) objective; task
d) task; goal
286.
In a(n) _____, Ann lays out the actions and the allocation of resources necessary to
achieve specific, short-term objectives that support the company’s broader strategic plan.
a) operational plan
b) tactical plan
c) strategic plan
d) business plan
287.
_____ usually define actions for less than one year and focus on accomplishing specific
objectives.
a) Operational plans
b) Strategic plans
c) Tactical plans
d) Business plans
288.
_____ is a system for minimizing the harm that might result from some unusually
threatening situations.
a) Contingency management
b) Crisis management
c) Strategic management
d) Emergency management
289.
a)
b)
c)
d)
290.
a)
b)
c)
d)
291.
a)
b)
c)
d)
A crisis management plan should include:
immediate denials of responsibility.
the people who are authorized to speak for the company.
canned responses to defend the company against the press.
contact information for all production level employees.
_____ is a process of arranging resources to carry out the organization’s plans.
Controlling
Evaluating
Leading
Organizing
The management pyramid shows:
the hierarchical nature of organizations.
top managers only.
middle managers only.
the levels of those who supervise production.
292. Don establishes the structure for the organization as a whole, and he selects the people who
can fill upper-level positions. Don is probably a _____ manager.
a) supervisory
b) middle
c) top
d) first-line
293.
Jorge is a department head, while Christina is an office manager. Both of them supervise
operating employees. Jorge and Christina are considered _____ managers.
a) first-line
b) middle
c) top
d) staff
294.
The process of guiding and motivating people to work toward organizational goals is
called _____.
a) managing
b) networking
c) leading
d) organizing
295.
a)
b)
c)
d)
296.
is:
a)
b)
c)
d)
Which of the following is an advantage of a high EQ?
sharp intellect
self-centered behavior
self-regulation
self-satisfaction
The leadership style that is most associated with restricting employee decision making
autocratic.
democratic.
laissez-faire.
theocratic.
297. Graham is an emergency room doctor who must make many quick, life-and-death decisions
and
who does not usually consult others. Graham is probably a(n) _____ leader.
a)
b)
c)
d)
298.
a)
b)
c)
d)
autocratic
democratic
laissez-faire
contingent
Adapting leadership style to current business circumstances is called _____ leadership.
contingency
democratic
laissez-faire
autocratic
299.
Mary is a department manager at a large specialty retailer. She customarily allows
employees the power to make decisions that apply to the selling function. Mary is using _____.
a)
b)
c)
d)
democratic leadership
participative management
contingency management
employee empowerment
300.
Adapting leadership style on the basis of the readiness of employees to accept the
changes or responsibilities the manager wants them to accept is called _____ leadership.
a)
b)
c)
d)
democratic
laissez-faire
situational
autocratic
301.
_____ leaders tend to focus on meeting established goals by making sure current
business operations run smoothly, while _____ leaders tend to reshape the destinies of their
organizations by inspiring employees to rise above self-interest and create new levels of success
for the company as a whole.
a) Situational; contingency
b) Laissez-faire; democratic
c) Transformational; transactional
d) Transactional; transformational
302.
Krista regularly schedules time to meet with employees, discuss problems, and suggest
solutions. What leadership role is Krista taking?
a) coaching
b) mentoring
c) participative management
d) situational management
303.
A set of shared values and norms that support the management system and that guide
management and employee behavior is called _____.
a) organizational behavior
b) corporate culture
c) group dynamics
d) human relations
304.
_____ is the process of measuring progress against goals and objectives and correcting
deviations if results are not as expected.
a) Controlling
b) Planning
c) Organizing
d) Directing
Management Skills
305.
Which of the following represents the most likely sequence of the steps in the decisionmaking
process?
a) define problem; develop alternatives; recognize need for change; evaluate results
b) define problem; recognize need for change; implement decision; develop contingency
plans; evaluate results
c) recognize need for change; analyze problem; implement decision; develop alternatives;
evaluate results
d) recognize need for change; define problem; develop alternatives; implement decision;
evaluate results
TRUE/FALSE QUESTIONS
The Four Basic Functions of Management
306. The four basic functions of management are planning, organizing, leading, and evaluating.
307.
When a manager gathers information from sources both inside and outside the
organization and then distributes that information to employees, the manager is playing an
interpersonal role.
308.
From deciding how to respond to a customer complaint to deciding whether to acquire
another company or develop a new product line, only top managers are involved in these critical
decisions.
309.
Managers engage in directing when they develop strategies for success, establish goals
and objectives for the organization, and translate their strategies and goals into action plans.
310. Strategic plans outline the firm’s long-range organizational goals and set a course of action
the firm will pursue to reach its goals.
311.
Dell’s business model emphasizes making money through product innovations such as
e- commerce and standardized product manufacturing.
312.
A vision statement is a brief articulation of why the organization exists, what it seeks to
accomplish, and the principles that the company will adhere to as it tries to reach its goals.
313.
SWOT stands for Strategy, Weakness, Opportunity, and Timing.
314.
Samsung’s core competency is its innovative, eye-catching product designs.
315.
Quantitative forecasts are typically based on intuitive judgment and expert opinion.
316.
Making predictions about sales of a new product on the basis of experience or the likely
response of competitors to the new product are examples of qualitative forecasting.
317.
Wal-Mart’s arch-rival Target uses differentiation to set itself apart from Wal-Mart.
318.
Nike uses cost leadership to gain a competitive edge over its key competitors.
319.
Setting appropriate goals has little effect on motivating employees.
320.
For IBM, an objective might be to capture 15 percent of the U.S. market for flat-screen
TVs over the next five years, and a goal might be to sell 800,000 laptop computers in the U.S.
in the next 12 months.
321.
Operational plans typically focus on departmental goals and cover a period of one to
three years.
322.
By laying out the actions and the allocation of resources necessary to achieve specific,
short-term objectives, Jean is developing a tactical plan to meet the goals of her department.
323.
The goal of crisis management is to keep the company functioning smoothly both during
and after a crisis.
324.
Organizing is the primary management function upon which all other management
functions depend.
325.
During the organizing stage of the management process, managers think through all the
activities that employees carry out as well as all the facilities and equipment employees need
in order to complete those activities.
326.
A typical corporate hierarchy consists of three levels and is commonly known as the
management pyramid.
327. Many companies are flattening their organizational structures, largely by removing
supervisory managers.
328. Management and leadership are essentially the same thing.
329. Well known for delegating decision-making authority, Meg Whitman, CEO of eBay, is
practicing participative management by spreading power around.
330.
Jeff Bezos of Amazon.com and Bill Gates of Microsoft are well-known transactional
leaders.
331. Coaching involves taking time to meet with employees, discussing any problems that may
hinder their ability to work effectively, and offering suggestions and encouragement to help
them find their own solutions to work-related challenges.
332. When a senior-level manager develops a long-term business relationship with a junior
member of an organization, the manager is serving as a mentor.
333. To improve the chances of success when the organization needs to change, managers should
block any resistance posed by employees to that change.
334.
Organizational culture is the set of underlying values, norms, and practices shared by
members of an organization.
335.
Rather than focus primarily on financial results, many companies now use a balanced
scoreboard.
336.
Quality is a measure of how closely goods or services conform to industry standards.
Management Skills
337.
The various skills required for communicating with other people, working effectively
with them, motivating them, and leading them are called administrative skills.
338.
Sally uses her administrative skills when she makes schedules, gathers information, and
analyzes data.
339.
Conceptual skills are especially important to first-line managers.
340.
The first step in the decision-making process is to develop a list of alternative courses of
action.
ORGANIZATION AND TEAMWORK
MULTIPLE CHOICE QUESTIONS
Designing an Effective Organization Structure
341.
A framework enabling managers to divide responsibilities, ensure employee
accountability, and distribute decision-making authority is called a company’s _____.
a) organizational process
b) organization chart
c) organizational culture
d) organization structure
342.
A(n) _____ is a diagram showing how employees and tasks are grouped and where the
lines of communication and authority flow.
a. organization chart
b. informal organization
c. organization structure
d. formal organization
343.
An organization chart depicts the official design for accomplishing tasks that lead to
achieving the organization’s goals, a framework known as the _____.
a. informal organization
b. organization structure
c. formal organization
d. organizational design
344.
Michelle participates in social activities and charitable causes with members of her
department. Michelle is part of the company’s _____.
a. organization framework
b. formal organization
c. informal organization
d. staff culture
345.
A(n) _____ is the network of interactions that develop on a personal level among
workers.
a. formal organization
b. informal organization
c. organization chart
d. organization structure
346.
a.
b.
c.
d.
347.
_____ is the degree to which organizational tasks are broken down into separate jobs.
Work specialization
Responsibility
Delegation
Chain of command
_____ is the pathway for the flow of authority from one management level to the next.
a. Organization structure
b. Organizational design
c. Management design
d. Chain of command
348.
Which of the following helps organizations function smoothly by clarifying who is
responsible for each task and who has the authority to make decisions?
a. chain of command
b. informal organization structure
c. work specialization
d. staff authority
349.
As an accountant in a financial services company, Donna is obliged to perform her
duties and to achieve the goals and objectives that are associated with her position. Donna has
been given a certain amount of _____ related to her job.
a. accountability
b. authority
c. line authority
d. responsibility
350.
When Juanita makes decisions, takes actions, and allocates resources to accomplish
organizational goals, Juanita is exercising her _____.
a. accountability
b. authority
c. rights
d. responsibility
351.
_____ is the power granted by the organization to make decisions, take actions, and
allocate resources to accomplish goals.
a. Authority
b. Delegation
c. Responsibility
d. Accountability
352.
_____ is the assignment of work and the authority and responsibility required to
complete it.
a. Authority
b. Delegation
c. Responsibility
d. Accountability
353.
Bernie is a bank manager. He transfers authority, responsibility, and accountability to
complete an assigned task to his assistant. This is an example of a manager _____ to a
subordinate.
a. shifting liability
b. reassigning authority
c. delegating
d. passing the buck
354.
A chain-of-command system that establishes a clear line of authority flowing from the
top down is known as a _____.
a. line organization
b. staff organization
c. functional organization
d. divisional organization
355.
Leticia is legal counsel for a major corporation. She provides legal advice to various
departments as needed. Leticia’s organization uses a chain-of-command system known as
_____.
a. functional organization
b. line organization
c. line-and-staff organization
d. virtual organization
356.
a.
b.
c.
d.
The number of people a manager directly supervises is called the _____.
line of communications
span of management
chain of command
line of authority
357.
A partner in a law firm has many associates reporting directly to him. This is an
example of a _____ organization
a. flat
b. staff
c. tall
d. line
358.
Jason works as an auditor for an IRS field office. This governmental agency has many
hierarchical levels, with few auditors reporting to one regional director. This is an example of
a _____ organization.
a. flat
b. staff
c. tall
d. matrix
359.
Which of the following are factors used in determining the ideal span of management in
an organization?
a. customer satisfaction
b. the feelings of the workers
c. the plans of the workers
d. the skill level of workers
360.
Which of the following is the structure that links activities at the top of the organization
with those at the middle and lower levels?
a. functional structure
b. matrix structure
c. horizontal structure
d. vertical structure
361.
Food Lion divides the operations group into four subgroups. This is an example of Food
Lion’s _____ structure.
a. vertical
b. functional
c. matrix
362.
A company that organizes itself around operations, marketing, human resources, and
finance departments is using the _____ structure.
a. division
b. functional
c. matrix
d. network
363.
Semiconductor giant Intel recently reorganized from two business units into five, each
focusing on different product types. Intel uses the _____ structure.
a. functional
b. divisional
c. matrix
d. network
364.
Time Warner organizes itself around four distinct units in its publishing division:
magazines, textbooks, trade books, and the Internet. What type of divisional structure does
Time Warner use?
a. customer
b. geographic
c. process
d. product
365.
A clothing store departmentalizes according to children's, women's, and men's clothing.
Which type of divisional structure is the store using?
a. customer
b. functional
c. process
d. product
366.
Which of the following structures allows employees from functional departments to
form teams to combine their specialized skills?
a. divisional structure
b. functional structure
c. matrix structure
d. network structure
367.
A _____ structure stretches beyond the boundaries of the company to connect a variety
of partners and suppliers that perform selected tasks for a headquarters organization.
a. matrix
b. functional
c. divisional
d. network
Working in Teams
368.
A ______ is a group that interacts to make decisions to help one another perform in each
member’s area of responsibility.
a. work group
b. team
c. committee
d. department
369.
A ______ is a group that works together with a shared mission and is collectively
responsible for their work.
a. work group
b. team
c. committee
d. department
370.
To address concerns of U.S. car buyers, the German automaker Audi pulled together
U.S. and German personnel to collaborate on a range of quality and reliability issues. This is
an example of a _____ team.
a. functional
b. problem-solving
c. self-managed
d. cross-functional
a.
b.
c.
d.
_____ teams are organized along the lines of the organization’s vertical structure.
Problem-solving
Cross-functional
Self-managed
Functional
a.
b.
c.
d.
In ______ teams, employees with different areas of specialization are brought together.
cross-functional
self-managed
problem-development
functional
371.
372.
373.
A _____ is a type of cross-functional team formed to work on a specific activity with a
completion point.
a. committee
b. task force
c. special-purpose team
d. self-managed team
374.
_____ teams are created as temporary entities to achieve specific goals.
a. Cross-structural
b. Special-purpose
c. Functional
d. Virtual
375.
A _____ usually has a long life span and may become a permanent part of the
organization structure.
a. product development team
b. special-purpose team
c. committee
d. task force
376.
Frank is a member of a group that is a permanent part of his organization's structure.
Frank's role is to represent his department in handling employee complaints and concerns.
Frank is most likely a member of a _____.
a. committee
b. self-managed team
c. special-purpose team
d. task force
377.
Jennifer is part of a team that locates each customer strategically in specific markets
around the world. The job of the team is to keep tabs on customer preferences in their specific
market. The team communicates via e-mail and teleconferencing. Jennifer most likely belongs
to a _____ team.
a. functional
b. special-purpose team
c. task force
d. virtual
378.
The optimal size for teams is generally thought to be between _____ members.
a. 3 and 5
b. 5 and 12
c. 12 and 17
d. 17 and 22
379.
When individuals are not held accountable for their work, the team may develop
______.
a. free riders
b. team leaders
c. team followers
d. drifters
TRUE/FALSE QUESTIONS
Designing an Effective Organization Structure
380.
An organization chart is a visual depiction showing how employees and tasks are
grouped and where the lines of communication and authority flow.
381.
The chain of command is the pathway for the flow of authority from one management
level to the next.
382.
Dwayne must report his activities to his team members and justify any results that differ
from his teammates' expectations, a process known as responsibility.
383.
Delegation is the power to make decisions, issue orders, carry out actions, and allocate
resources to achieve the organization’s goals.
384.
The simplest and most common chain-of-command system is known as line-and-staff
organization.
385.
The arrangement of activities into logical groups that are then clustered into larger
departments and units that form the total organization is known as specialization.
386.
Centralized decision making and efficient use of resources are two advantages of
departmentalization by function.
387.
Functional departmentalization can hinder communication between departments and
overemphasize work specialization.
388.
Customer divisions enable companies to spread over a national or an international area
to respond more easily to local customs, styles, and product preferences.
389.
A disadvantage of the divisional structure is that it can lead to poor coordination
between divisions that can result in a narrow focus on divisional goals at the expense of the
organization’s overall goals.
390.
A matrix structure stretches beyond the boundaries of the company to connect a variety
of partners and suppliers that perform selected tasks for a headquarters organization.
391.
In a hybrid structure, companies combine various elements from the four standard types
of structure.
Working in Teams
392.
While the vertical chain of command is a tried-and-true method of organizing for
business, it is limited by the fact that decision-making authority is often located high up the
management hierarchy.
393.
Shifting to a team structure often requires a fundamental shift in the organization’s
culture.
394.
A problem-solving team may also be self-managed and cross-functional.
395.
A task force is a type of cross-functional team formed to work on a specific activity with
a completion point.
396.
Virtual teams are groups of physically dispersed members who work together to achieve
a common goal.
397.
The optimal size for teams is generally thought to be between 12 and 17 members.
398.
Free loaders are team members who do not contribute their fair share to the group’s
activities because members are not being held individually accountable for their work.
399.
The five stages of team development include forming, storming, grandstanding,
performing, and adjourning.
400.
Team members are most committed to their team's goals and behave most often with the
goals in mind when the team is in the norming stage.