Business Management Midterm

In the context of corporations, what is a white knight?

A more acceptable firm that is willing to acquire the firm threatened by a hostile takeover

A monopoly that exists when a country is the only source of an item, or the most efficient producer of an item.

Absolute Advantage

If a firm issues a poison pill when facing a hostile takeover attempt, it:...?

Allows stockholders to buy shares of stock at prices lower than the market value.

An international trade alliance that promotes open trade and economic and technical cooperation among member nations.

Asia-Pacific Economic Cooperation (APEC)

The difference between the flow of money into and out of a country.

Balance of Payments

The difference in value between a nation's exports and its imports

Balance of Trade

Who is responsible for setting the long-range objectives of a corporation?

Board of Directors

Many employees utilize different _____ at work than they do at home.

Body Language

A group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets.

Cartel

The basis of most international trade, when a company specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.

Comparative Advantage

_____ is the activities that individuals, groups, and organizations undertake to protect their rights as consumers.?

Consumerism

When Target has a sale on bed linens,...?

Consumers will demand more linens.

The hiring of a foreign company to produce a specified volume of the initiating company's product to specification; the final product carries the domestic firm's name.

Contract Manufacturing

The most common way that businesses exercise community responsibility is through...?

Contributions to charitable organizations.

_____ are typically owned by many individuals and organizations who own shares of the business, called stock.

Corporations

Foreign trade agreements that involve bartering products for other products instead of for currency

Countertrade Agreements

What is considered ethical may differ depending on the ___ in which a business operates.

Culture

What did Jon Barnard do to help Checkers develop a competitive advantage over the competition?

Developed a database that improved efficiency

The ownership of overseas facilities.

Direct Investment

_____ are profits of a corporation that are distributed in the form of cash payments to stockholders.

Dividends

Partnerships are quasi-taxable organizations. This means that they:

Do not pay taxes when submitting the partnership tax return to the Internal Revenue Service.

The act of a country or business selling products at less than what it costs to produce them

Dumping

A prohibition on a particular product.

Embargo

Sole proprietorships are typically small businesses that:...?

Employ fewer than 50 people

Avoiding misconduct and doing what is right, just, and fair relates to a business's...?

Ethical responsibility

The principles and standards that determine acceptable conduct in business are referred to as...?

Ethics

A union of European nations established in 1958 to promote trade among its members; one of the largest single markets today.

European Union (EU)

Regulations that restrict the amount of currency that can be bought or sold.

Exchange Controls

The ratio at which one nation's currency can be exchanged for another nation's currency.

Exchange rate

The sale of goods and services to foreign markets.

Exporting

T/F? A sole proprietor has limited liability in meeting the debts of his or her business.

FALSE

T/F? All a business has to do to maintain ethical conduct is to follow the law.

FALSE

T/F? Conflicts of interest are payments, gifts, or special favors intended to influence the outcome of a decision.

FALSE

T/F? Corporate citizenship is the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their owners

FALSE

T/F? Ethics and social responsibility mean the same thing.

FALSE

T/F? In a free-market system, the government regulates business.

FALSE

T/F? Nonprofit organizations such as Habitat for Humanity do not engage in management, marketing, or finance activities.

FALSE

T/F? Owners always manage their businesses.

FALSE

T/F? Owners have little responsibility to provide funds for the operation of the business.

FALSE

T/F? The best way to judge the ethics of a decision is to look at it from a manager's or employee's point of view.

FALSE

T/F? The concept of social responsibility is universally accepted.

FALSE

If Sony was investigated for allegedly raising prices of its PlayStation excessively during the Christmas buying season and thereby manipulating the supply of games available at that time, this would be an ethical issue concerned primarily with...?

Fairness and honesty

The function concerned with obtaining and managing money and using it effectively is called...?

Finance

A corporation doing business outside the state in which it is chartered is known as a(n) _____...?

Foreign corporation

A form of licensing in which a company, the franchiser, agrees to provide a franchisee a name, logo, methods of operation, advertising, etc. in return for a financial commitment and the agreement to conduct business in accordance with the franchiser's standard of operations.

Franchising

A trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations where international trade problems could be discussed and resolved.

General Agreement on Tariffs and Trade (GATT)

A strategy that involves standardizing products for the whole world, as if it were a single entity.

Global Strategy (Globalization)

In a socialist economic system, people are free to choose an occupation of their choice, but many people work in ___ jobs.

Government

___________ refers to attaching a positive environmental association on an unsuitable product, service, or practice

Greenwashing

If a manager chooses to act so that she benefits financially or otherwise at the expense of her firm, then she...?

Has a conflict of interest.

A tax levied by a nation on goods imported into the country.

Import Tarriff

The purchase of goods and services from foreign services

Importing

Which of the following is a disadvantage of partnerships over sole proprietorships?

In partnerships, profits have to be shared, whereas in sole proprietorships all profits belong exclusively to the owner.

The buying, selling, and trading of goods and services across national boundaries.

International Business

Organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.

International Monetary Fund (IMF)

The sharing of the cots and operation of a business between a foreign company and a local partner.

Joint Venture

A trade agreement in which one company, the licensor, allows another company, the licensee, to use its company name, products, patents, etc. in exchange for a fee or royalty

Licensing

The functions of organizing, staffing, planning, and controlling are most closely associated with..?

Managers

A corporation that operates on a worldwide scale, without significant ties to any one nation.

Multinational Corporation (MNC)

A plan, used by international companies, that involves customizing products, promotion, distribution according to cultural, technological, regional, and national differences.

Multinational Strategy

Agreement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade between Canada, the US, and Mexico.

North American Free Trade Agreement (NAFTA)

Laws regarding safety in the workplace are enforced by the _______.?

Occupational Safety and Health Administration

A similarity between limited liability companies and S corporations is that both:..?

Offer limited liability to owners.

The relocation of business processes by a company or subsidiary to another country. Offshoring is different than outsourcing because the company retains control of the off shored processes.

Offshoring

According to the text, ethical decisions in an organization are influenced by (1) individual moral standards, (2) the influence of managers and co-workers, and (3)...?

Opportunity to engage in misconduct.

The transferring of manufacturing or other tasks, such as data processing, to countries where labor and supplies is less expensive.

Outsourcing

____ involves taking someone else's work and presenting it as your own.

Plagiarism

Studies have found a direct link between social responsibility and _________ in business.

Profitability

Articles of partnership are legal documents that set forth the basic agreement between partners. The issues covered usually include:...?

Provisions for leaving the patnership

A written authorization that assigns a stockholder's voting privilege to another is called:...?

Proxy

The form of business ownership that has the ability to raise capital most easily is a:

Public corporation

A restriction on the number of unites of a particular product that can be imported into a country.

Quota

Factors of production are...?

Resources used to produce goods and services.

John F. Kennedy's consumer bill of rights outlined four rights: the right to be informed, the right to choose, the right to be heard, and the right to...?

Safety

Salma owns a pharmacy near a hospital. She started the business with a personal loan and is wholly responsible for repaying it. Salma also needs to pay personal income tax on the profits generated from the business. Her business is an example of a(n):...?

Sole proprietorship

Economic contraction occurs when...?

Spending declines

Customers, employees, and investors are examples of...?

Stakeholders

A partnership formed to create competitive advantage on a worldwide basis.

Strategic Alliance

T/F? A central issue of economics is how to fulfill an unlimited demand for goods and services in a world with limited resources.

TRUE

T/F? An acquisition occurs when one company purchases another company by buying most of its stock

TRUE

T/F? Economic expansion occurs when an economy is growing and people are spending more money.

TRUE

T/F? Managers coordinate resources to achieve the firm's goals.

TRUE

T/F? Sustainability involves conducting activities so as to provide for the long-term well-being of the natural environment, including all biological entities.

TRUE

T/F? The equilibrium price is represented by the point where a product's supply and demand curves intersect.

TRUE

T/F? The most basic ethical concerns have been formalized through laws and regulations that encourage conformity to society's values and norms.

TRUE

T/F? The primary goal of business activities is profit.

TRUE

T/F? Theft of time is the leading area of misconduct observed in the workplace.

TRUE

T/F? There are four dimensions of social responsibility: economic, legal, ethical, and voluntary.

TRUE

T/F? Without a code of ethics or formal policy on ethics, employees are likely to base their decisions on how their peers and superiors behave.

TRUE

International organization dealing with the rules of trade between nations.

The World Trade Organization (WTO)

A nation's negative balance of trade, which exits when that country imports more than it exports.

Trade Deficit

A firm that buys goods in one country and sells them to buyers in another

Trading Company

One of the most difficult things for a business to restore after an ethics scandal is...?

Trust

Big Sandwiches merges with its supplier, FC Ingredients, in an effort to have a constant supply of sauce for its sandwiches. This is an example of a...?

Vertical merger

Philanthropic contributions made by a business to a charitable organization represent which dimension of social responsibility?

Voluntary

____ is the act of an employee exposing an employer's wrongdoing to outsiders.

Whistleblowing

An organization established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries; formally known as the International Bank for Reconstruction and Development

World Bank

Which of the following is an advantage that corporations provide as a form of business ownership? a. Corporations have access to external funding sources. b. The income earned by corporations is taxed only once. c. The owners of corporations do not have to share their profits with stockholders. d. Corporations have the most freedom from government regulations. e. The process involved in forming corporations is very easy and inexpensive.

a. Corporations have access to external funding sources.

After demand began to accelerate beyond supply, Mrs. Acres Homemade Pies was faced with a series of options. Which of the following is not one of those options? a. Maintain current levels of product and reduce the price b. Maintain current production levels and raise prices c. Expand the facility and staff while maintaining price d. Contract the production of pies to a national restaurant chain e. Increase production and maintain the price

a. Maintain current levels of product and reduce the price

Which of the following is a disadvantage of a corporation? a. Absence of perpetual life b. Employee-owner separation c. Unlimited liability d. Lack of expansion potential e. Lack of regulatory controls

b. Employee-owner separation

Which of the following is an advantage of a partnership? a. Lack of business responsibility b. Few regulatory controls c. Distribution of profits d. Unrestricted access to funds e. Unlimited liability

b. Few regulatory controls

Which of the following forms of business is associated with unlimited liability to the owners? a. Quasi-public corporations b. Sole proprietorships c. C Corporations d. Cooperatives e. S Corporations

b. Sole proprietorships

Which of the following is a defining characteristic of public corporations? a. They are owned and managed by just one or a few people. b. Their stock can be bought, sold, or traded by anyone. c. Their stockholders do not receive any dividends. d. They do not pay taxes on their income. e. They are not required to disclose any financial information to their stockholders.

b. Their stock can be bought, sold, or traded by anyone.

Which of the following have not been cited in your text as incidents of unethical business activity recently? a. Accounting fraud b. Deceptive advertising of food and diet products c. Corporate charitable giving d. Stealing via the Internet e. Unfair competitive practices in the computer industry

c. Corporate charitable giving

Which of the following is a disadvantage of a partnership? a. Limited liability faced by the partners b. Stringent government regulations c. Difficulty of selling the partnership interest d. Difficulty of forming the business e. Insufficient capital and credit

c. Difficulty of selling the partnership interest

Which of the following statements is true of private corporations? a. They do not pay taxes on their income. b. They are required to disclose financial information publicly. c. They are owned and managed by just one or a few people. d. Their stock can be bought or sold by anyone. e. Their workforce usually consists of fewer than 50 employees.

c. They are owned and managed by just one or a few people.

Which of the following is an advantage of a sole proprietorship? a. It is unaffected by the death or withdrawal of its owner. b. It has limited liability for the debts incurred by the business. c. It is hard to dissolve. d. It is easy and inexpensive to form. e. It is heavily regulated by the government.

d. It is easy and inexpensive to form.

Which of the following organizational forms is the most expensive to set up? a. A limited liability company b. A limited partnership c. A general partnership d. A sole proprietorship e. A corporation

e. A corporation

Which of the following is a difference between partnerships and sole proprietorships? a. Partnerships are subjected to fewer government regulations than sole proprietorships. b. In partnerships, the owners have complete control of the business, whereas in sole proprietorships they do not. c. Partnerships make possible the greatest degree of secrecy, whereas sole proprietorships do not. d. In sole proprietorships, the owners have access to more funds and resources than in partnerships. e. Partnerships have better access to diverse skills when compared to sole proprietorships.

e. Partnerships have better access to diverse skills when compared to sole proprietorships.

Shelly's business was successful for all of the following reasons except...? a .appropriate incentives for employees. b .quality product. c. productive employees. d. employees who enjoyed being part of a new business. e. she had no competitors.

e. She had no competitors

Which of the following is true of S corporations? a. Their shareholders have unlimited liability. b. They are taxed twice. c. They do not have any restrictions on the number of shareholders. d. They are very easy to form and operate. e. Their shareholders can shift income and appreciation to others.

e. Their shareholders can shift income and appreciation to others.

Which of the following is true of limited liability companies? a. They are taxed like a C corporation. b. They require members to regularly hold meetings. c. They are established for a specific project or for a limited time. d. They are very complex and difficult to run. e. They protect the members' personal assets in case of lawsuits.

e. They protect the members' personal assets in case of lawsuits.

It is easier to raise funds in partnerships than in sole proprietorships because:...?

several partners mean greater earning power and credit.