1010 Chapters 5-7 Questions

Anna recently left a large insurance firm and opened a home-based business preparing medical transcriptions for doctors. Based on recent statistics, she can expect:

The emergence of affordable technology will make it less challenging for her to compete with larger firms offering the same service. Technology is "leveling the playing field" to allow for a more competitive environment.

As a manager, two of Sylvia's strengths are her ability to communicate goals clearly, and her ability to guide, coach, and motivate workers. Based on these strengths, __________ is a management function that Sylvia is likely to be good at performing.

Leading means creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve goals and objectives in a timely manner.

The goal of an intrapreneur is:

To develop new products and generate new profits for the corporation. This can create positive outcomes for both the intrapreneur and the corporation.

Trevor and Tyler own all the stock in the Double T Corporation. The stock of this corporation is not sold to the general public. Trevor and Tyler own a:

A closed (private) corporation is one whose stock is held by a few people and isn't available to the general public

Travis has agreed to invest $16,000 in a partnership with his sister and brother-in-law. He does not intend to actively work in the partnership, nor does he wish to risk any of his own assets other than the $16,000 he initially invests. The partnership has agreed to permit him to share in the profits. As an expert on forms of business ownership, you know that Travis is a ______________ in this partnership.

A limited partner is an owner who invests money in the business but does not have any management responsibility or liability for losses beyond his or her investment.

Which of the following statements accurately depicts an advantage that small business has over big business?

A small business can maneuver and change quicker than most large businesses can. It can react to market conditions and customer concerns much faster. Being more responsive to customers gives small businesses a distinct advantage.

Foreign investment in U.S. companies continues to be strong. When Belgian-based In-Bev purchased the largest beer company in the U.S., Anheuser-Busch, this action constituted a(n) _________________ with a negotiated selling price of $52 billion.

An acquisition is one company's purchase of the property and obligations of another company.

Recently, a senior software engineer complained that his boss was always in the command and control mode: "He doesn't trust us to make the right decision!" The boss rarely took the advice of his employees. There were occasions when productivity was hampered because he chose to do things only his way. Referring to leadership styles, this would best be described as:

Autocratic leadership means making managerial decisions without consulting others. This style is effective in emergencies and when absolute followership is needed—for example, when fighting fires. Autocratic leadership is also effective sometimes with new, relatively unskilled workers who need clear direction and guidance. Former Los Angeles Lakers Coach Phil Jackson used an autocratic leadership style to take the team to three consecutive National Basketball Association championships in his first three seasons. By following his leadership, a group of highly skilled individuals became a winning team. Today Jackson is president of the New York Knicks. Do you think he is using the same leadership style as president as he did as coach?

Peppy Roaney believes that pizza is a much more versatile dish than most people realize. As the national marketing manager for Pizza Guys, he observed how consumers were delighted with barbecue pizza, Hawaiian pizza, Mexican pizza and other unique combinations. His suggestions for other unusual pizzas, however, were met with a negative response by his superiors. Even some of his colleagues laughed at his ideas. Peppy's confidence in his ability to understand the market has led him to focus on planning a business of his own. Peppy realizes that he will take a risk when he leaves his job with Pizza Guys and embarks upon a new venture: Peppy's Pizzazzeria. Peppy is excited about the potential of profitably catering to the unmet desires of pizza consumers. Peppy has inquired about the possibility of obtaining a microloan from the SBA. This type of loan is awarded primarily on the basis of the:

Borrower's integrity and the soundness of the business idea. Can you blame them. Who would you want to loan money to?

Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business:

Ceases to exist I know the book says "the business no longer exists (unless it is sold or taken over by the sole proprietor's heirs); however, I want to clarify this statement. You can sell (or leave to an heir) the assets of a sole proprietorship, including the name, but you cannot buy, sell, or inherit the business itself. The reason is simple. Legally and according to the government there is no distinction between a sole proprietor and a sole proprietorship. If the owner dies, he/she cannot sell or leave himself/herself to anyone else. Someone else could buy/inherit the assets and form their own sole proprietorship with the same name, but you cannot buy/inherit a sole proprietorship.

Marco is a franchisee with Daggies, a chain of sandwich shops. His business was doing well until several Daggies franchisees got in trouble and were forced to close their shops. Soon afterward, Marco's business deteriorated and he too was forced to close. This is an example of:

Coattail effects. What happens to your franchise if fellow franchisees fail? The actions of other franchises have an impact on your future growth and profitability. Due to this coattail effect, you could be forced out of business even if your particular franchise has been profitable. For example, the customer passion for high-flying franchisor Krispy Kreme sank as the market became flooded with new stores and the availability of the product at retail locations caused overexposure. McDonald's and Subway franchisees complain that due to the company's relentless growth, some new stores have taken business away from existing locations, squeezing franchisees' profits per outlet.

As a middle manager for her firm, Tori just finished comparing the results of a promotional campaign with the outcome expectations. The next step in the control process is:

Communicate results and deviations with management and employees involved. Controlling consists of five steps: Establishing clear performance standards. This ties the planning function to the control function. Without clear standards, control is impossible. Monitoring and recording actual performance or results. Comparing results against plans and standards. Communicating results and deviations to the appropriate employees. Taking corrective action when needed and providing positive feedback for work well done.

When two firms which do not participate in the same industries, for example, a software company and a fast food restaurant company, decide to merge, the result is called a ____________ merger.

Conglomerate A conglomerate merger unites firms in completely unrelated industries in order to diversify business operations and investments.

Peppy Roaney believes that pizza is a much more versatile dish than most people realize. As the national marketing manager for Pizza Guys, he observed how consumers were delighted with barbecue pizza, Hawaiian pizza, Mexican pizza and other unique combinations. His suggestions for other unusual pizzas, however, were met with a negative response by his superiors. Even some of his colleagues laughed at his ideas. Peppy's confidence in his ability to understand the market has led him to focus on planning a business of his own. Peppy realizes that he will take a risk when he leaves his job with Pizza Guys and embarks upon a new venture: Peppy's Pizzazzeria. Peppy is excited about the potential of profitably catering to the unmet desires of pizza consumers.Peppy knows a lot about marketing, but not much about the legal or financial aspects of starting a new business. He wants to consult with a lawyer and accountant, but his budget is tight with all of the expenses involved in getting Peppy's Pizzazzeria up and running. Peppy should:

Consult with a lawyer and accountant even though the budget is tight. It can be more costly if you don't do things correctly.

Peppy Roaney believes that pizza is a much more versatile dish than most people realize. As the national marketing manager for Pizza Guys, he observed how consumers were delighted with barbecue pizza, Hawaiian pizza, Mexican pizza and other unique combinations. His suggestions for other unusual pizzas, however, were met with a negative response by his superiors. Even some of his colleagues laughed at his ideas. Peppy's confidence in his ability to understand the market has led him to focus on planning a business of his own. Peppy realizes that he will take a risk when he leaves his job with Pizza Guys and embarks upon a new venture: Peppy's Pizzazzeria. Peppy is excited about the potential of profitably catering to the unmet desires of pizza consumers.Peppy is confident that Peppy's Pizzazzeria will be a success, but only if he has enough money to do things right. Since Peppy has very little personal wealth, he knows he must obtain financial assistance. In order prepare for meetings with bankers and potential investors, Peppy should:

Develop a business plan. A business plan is a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and qualifications of the owner(s). A business plan forces potential small-business owners to be quite specific about the products or services they intend to offer. A business plan is also mandatory for talking with bankers or other investors.

Carlos had been thinking of setting up a graphic design service business for quite some time. He knew that he wanted to work at home and he now had several leads for prospective customers. He also knew how much money he needed to make to cover his expenses. He had several ways to approach his new business including working by himself or taking on a partner. Both ways needed more thought to determine what each would involve. In terms of the rational decision-making model, Carlos is in which of the following steps?

Develop alternatives The rational decision-making model is a series of steps managers often follow to make logical, intelligent, and well-founded decisions. Think of the steps as the six Ds of decision making: Define the situation. Describe and collect needed information. Develop alternatives. Decide which alternative is best. Do what is indicated (begin implementation). Determine whether the decision was a good one, and follow up.

The U.S. government's Immigration Act of 1990:

Encouraged entrepreneurs to come to the U.S. through "investor visas." The Immigration Act passed by Congress in 1990 was intended to encourage more entrepreneurs to come to the United States. Entrepreneurship is where most economic growth comes from in the U.S.

Peppy Roaney believes that pizza is a much more versatile dish than most people realize. As the national marketing manager for Pizza Guys, he observed how consumers were delighted with barbecue pizza, Hawaiian pizza, Mexican pizza and other unique combinations. His suggestions for other unusual pizzas, however, were met with a negative response by his superiors. Even some of his colleagues laughed at his ideas. Peppy's confidence in his ability to understand the market has led him to focus on planning a business of his own. Peppy realizes that he will take a risk when he leaves his job with Pizza Guys and embarks upon a new venture: Peppy's Pizzazzeria. Peppy is excited about the potential of profitably catering to the unmet desires of pizza consumers. Given Peppy's willingness to accept the risks of opening and running Peppy's Pizzazzeria, he is clearly an example of a(n):

Entrepreneur. A person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

Twenty-six years ago, several small vineyard owners in California joined voluntarily to market their grapes and wine in an attempt to get better prices. Over the years they expanded the organization to include other services such as buying and selling farm supplies and equipment and providing financial and technical services. The arrangement established by these vineyard owners is an example of a(n):

Farm cooperative. A cooperative, or co-op, is owned and controlled by the people who use it—producers, consumers, or workers with similar needs who pool their resources for mutual gain. The best example is a farm cooperative. The goal at first was for farmers to join together to get better prices for their food products. Eventually the idea expanded, and farm cooperatives now buy and sell fertilizer, farm equipment, seed, and other products in a multibillion-dollar industry. Cooperatives have an advantage in the marketplace because they don't pay the same kind of taxes corporations pay. Cooperatives are still a major force in agriculture and other industries today. Some top co-ops have familiar names such as Land O' Lakes, Sunkist, Ocean Spray, Blue Diamond, Associated Press, Ace Hardware, True Value Hardware, Riceland Foods, and Welch's.

Midas Muffler sells franchises to prospective businesspersons who want to use the Midas name and offer Midas products. In a franchise arrangement, Midas would be the ________, and the buyer of the franchise is the ________.

Franchisor; franchisee A franchisor is a company that develops a product concept and sells others the rights to make and sell the products. A franchisee is a person who buys a franchise.

At Lifeline Pharmaceuticals, highly regarded research personnel rely on top management to provide strategic direction. Beyond that, researchers work on their own to develop new drugs to satisfy customer needs and company profit objectives. Middle management at Lifeline practice ___________.

In free-rein leadership managers set objectives and employees are free to do whatever is appropriate to accomplish those objectives. Free-rein leadership is often the most successful leadership style in certain organizations, such as those in which managers supervise doctors, professors, engineers, or other professionals. The traits managers need in such organizations include warmth, friendliness, and understanding. More and more firms are adopting this style of leadership with at least some of their employees.

When starting a small business, it's important to remember:

Learning from others and gaining relevant business experience improves the odds for success. This is the value of education - that you don't have to learn everything from the "school of hard knocks."

Jenna Raiter, the president and CEO of AutoMotion Auto Service Centers, has asked several managers and employees to help establish a statement to outline the fundamental purposes of their company. The result of this effort is likely to be a document known as a(n):

Mission statement. A mission statement outlines the organization's fundamental purposes. The mission statement becomes the foundation for setting specific goals and objectives.

Kayla is a supervisor who manages a production line. She spends several hours each week developing specific employee work assignments and production schedules for the coming week so that the production department can meet its short-term production objectives. This suggests that a significant component of Kayla's job involves:

Operational planning. Operational planning is the process of setting work standards and schedules necessary to implement the company's tactical objectives. Whereas strategic planning looks at the organization as a whole, operational planning focuses on specific supervisors, department managers, and individual employees.

Peppy Roaney believes that pizza is a much more versatile dish than most people realize. As the national marketing manager for Pizza Guys, he observed how consumers were delighted with barbecue pizza, Hawaiian pizza, Mexican pizza and other unique combinations. His suggestions for other unusual pizzas, however, were met with a negative response by his superiors. Even some of his colleagues laughed at his ideas. Peppy's confidence in his ability to understand the market has led him to focus on planning a business of his own. Peppy realizes that he will take a risk when he leaves his job with Pizza Guys and embarks upon a new venture: Peppy's Pizzazzeria. Peppy is excited about the potential of profitably catering to the unmet desires of pizza consumers. Peppy remains confident and enthusiastic even though his colleagues have poked fun at his ideas. This shows that Peppy is:

Self-nurturing. You must believe in your idea even when no one else does, and be able to replenish your own enthusiasm. When Walt Disney suggested the possibility of a full-length animated feature film, Snow White, the industry laughed. His personal commitment and enthusiasm caused the Bank of America to back his venture. The rest is history.

Jamal is part of a management group that is examining whether his company, State Engineering, should offer some important new services that would broaden its business by appealing to a different group of potential clients. Jamal's group is involved with:strategic planning.

Strategic planning is done by top management and determines the major goals of the organization and the policies, procedures, strategies, and resources it will need to achieve them. At the strategic planning stage, top managers of the company decide which customers to serve, when to serve them, what products or services to sell, and the geographic areas in which to compete

Javier is the sole proprietor of a golf shop. Because he is a sole proprietor, any profit Javier's business earns is:

Taxed only as Javier's personal income. As far as the law and the government are concerned, the sole proprietor (Javier) and the sole proprietorship (the golf shop) are the same thing. In fact, when you open a bank account for a Sole Proprietorship it will be listed under the name of the Sole Proprietor followed by DBA (Doing Business AS) and then the name of the business.

The further up the managerial ladder a person moves, the __________ his or her original job skills become.

The lowest levels of management need good technical skills, but those skills become less important in middle management, and pretty irrelevant at the highest level of management. However, conceptual skills are not as necessary in the lower levels of management, but very necessary the higher the management level. Interpersonal skills are important at each level. For example, a head football coach needs conceptual skills to create a game plan to utilize his teams strengths and exploit the opponents weaknesses. He needs to be able to see the big picture and how the different aspects of the team (offense, defense, and special teams) will work together. The team's position coaches (supervisory level of management) are the ones that need to have technical skills (blocking, tackling, throwing, catching, kicking, etc.) so they can teach those skills to the players. They don't need the conceptual skills to be effective teachers and the head coach doesn't need all those skills to be effective in what he does.

Which of the following statements about S corporations is most accurate?

The major attraction of S corporations is that they avoid the problem of double taxation. S Corporations are not taxed as an entity for the profits they generate, but the individual owners (stockholders) are personally taxed on the generated profits. This is how partnerships and sole proprietorships are also taxed.