Business 161 Test #4

CH.6: Irina, Ron, and Benz want to start the business of designing the interiors of offices. All of them want to actively manage the company and do not want to be personally responsible for the debts and obligations of the company. Moreover, they do not want to hold regular board meetings. The three are most likely to form a _____. a. limited liability company b. nonprofit corporation c. sole proprietorship d. general partnership

a. limited liability company

CH.6: Which of the following statements is a similarity between general partnerships and sole proprietorships? a. Both allow owners to avoid double taxation. b. Both are formed by filing articles of incorporation. c. Both are considered legal entities separate from their owners. d. Both allow owners to enjoy limited liability.

a. Both allow owners to avoid double taxation.

CH.14: Which of the following is a key process of the control process? a. Establishing clear performance standards b. Interpreting marketplace trends c. Allocating resources to projects d. Training employees

a. Establishing clear performance standards

CH.6: Which of the following statements best describes a C corporation? a. It is a legal business entity that offers limited liability to all of its owners, who are called stockholders. b. It is a form of corporation that avoids double taxation by having its income taxed as a partnership. c. It is a form of business ownership in which two or more members act as co-owners and have unlimited liability. d. It is a form of business ownership in which the firm is considered by law merely as an extension of its owner.

a. It is a legal business entity that offers limited liability to all of its owners, who are called stockholders.

CH.6: Which of the following statements is true of sole proprietorships? a. Owner receives the entire share of the firms' profits. b. Firms are not affected by the withdrawal of the owner. c. Owner of the firm is able to enjoy limited liability. d. Firms are treated as a separate legal entity.

a. Owner receives the entire share of the firms' profits.

CH.6: In the context of corporate restructuring, which of the following is a common objective of a conglomerate merger? a. Reducing risk by making a firm less vulnerable to adverse conditions in any single market b. Providing tighter integration of production and increased control over the supply of crucial inputs c. Improving efficiency by eliminating duplication of facilities and personnel d. Increasing size and reducing competition within an industry

a. Reducing risk by making a firm less vulnerable to adverse conditions in any single market

CH.6: Which of the following is a drawback of franchising? a. Restrictions on sale b. Lack of brand-name recognition c. Lack of access to funding d. High level of risk

a. Restrictions on sale

CH.14: In the context of management hierarchy, which of the following statements is true of first-line managers? a. They manage the people who do the work. b. They control the middle management. c. They allocate time, money, and other resources to projects. d. They set the overall direction of a firm.

a. They manage the people who do the work.

CH.17: Which of the following is a difference between Six Sigma and total quality management (TQM)? a. Unlike TQM, Six Sigma relies on expensive employee training and expert guidance. b. Unlike Six Sigma, TQM relies on teams of workers to carry out specific projects to improve quality. c. Unlike TQM, Six Sigma focuses on prevention of errors. d. Unlike Six Sigma, TQM aims to reduce defects of any operation to a level of no more than 3.4 per million opportunities.

a. Unlike TQM, Six Sigma relies on expensive employee training and expert guidance.

CH.6: In the context of corporations, the _____ and other corporate officers manage the company on a daily basis. a. chief executive officer b. board of directors c. profit-making investors d. stockholders

a. chief executive officer

CH.14: Lumicia Media, a medium-sized firm, groups its employees based on their area of expertise. Thus, the firm has a design department, a content department, and a finance department. This scenario exemplifies _____. a. product departmentalization b. customer departmentalization c. geographical departmentalization d. functional departmentalization

NOT A: product departmentalization

CH.14: Identify a true statement about the control process of an organization. a. It typically begins with measuring actual performance against standards. b. It is most effective when performance is measured at the end of the time frame attached to a goal. c. It ends with the establishment of clear performance goals. d. It must change with a change in the environment.

NOT B: It is most effective when performance is measured at the end of the time frame attached to a goal.

CH.6: Daynon Inc. buys Leeston Corp., a firm that makes shipbuilding components, despite the opposition from Leeston's board of directors and its top management. This acquisition exemplifies a _____. a. bootstrap fusion b. compulsive blend c. lobster trap d. hostile takeover

NOT B: compulsive blend

CH.6: Unlike corporations, limited liability companies (LLCs): a. are required to hold regular board meetings. b. have more reporting requirements. c. are subject to less paperwork. d. cannot include owners who are foreign investors.

NOT B: have more reporting requirements.

CH.6: Comfy Trend Inc., a clothing in the United States, licenses a garment manufacturing firm in Tokyo to operate under its name and trademark. The firm also buys the rights to use Comfy Trend Inc.'s production and business methods. This scenario is an example of a _____. a. business format franchise b. conglomerate merger c. distributorship d. divestiture

NOT C: distributorship

CH.14: Danish, a division head in Lieven & Lieven Corp., supervises section leaders and foremen and reports to the vice president of the organization. He is primarily responsible for coordinating various teams and special projects with his peers from other departments. In this context, Danish is a _____. a. middle manager b. first-line manager c. top manager d. supervising manager

a. middle manager

CH.17: Omega Inc. is a company that manufactures automobile parts. The goods produced are standardized, and they are produced in large volumes to avoid stock-outs. The company uses highly specialized machinery for production. In the given scenario, Omega Inc. most likely uses a _____. a. product layout b. cellular layout c. process layout d. combined layout

a. product layout

CH.14: Managers with strong conceptual skills typically excel at: a. strategic planning. b. team building. c. mobilizing support. d. conflict resolution.

a. strategic planning.

CH.17: TeakO Inc., a construction company, is given the contract to build a primary school. Jim, the project manager, makes a list of activities necessary to complete the project, the time required for each activity, and each activity's immediate predecessors. He wants to use this information to track the project status and ensure that the project completes on time. To accomplish his objective, Jim should create _____. a. the critical path b. Six Sigma model c. process-centered design d. a SWOT matrix

a. the critical path

CH.14: The right span of control for managers in an organization varies based on: a. the location of the employees. b. the number of suppliers. c. the location of the customers. d. the number of competitors.

a. the location of the employees.

CH.17: Blossom Inc. is a bookstore. In this case, it sells _____. a. perishable products b. durable goods c. nondurable goods d. intangible products

b. durable goods

CH.17: In the context of the critical path method, which of the following is true of the critical path? a. The activities on the critical path usually have high slack. b. A delay in any activity on a critical path is likely to delay the completion of the entire project. c. Resources allocated to activities on the critical path are usually dispensable and can be diverted to other activities if they develop slack. d. The critical path represents the sequence of activities that is the hardest to complete.

b. A delay in any activity on a critical path is likely to delay the completion of the entire project.

CH.14: Which of the following is the first step in the strategic planning process? a. Setting goals for an organization b. Defining the mission of an organization c. Creating strategies for competitive differentiation d. Evaluating an organization's competitive position

b. Defining the mission of an organization

CH.17: Which of the following statements is true of a process layout? a. It is used by firms when they produce goods that are relatively standardized and produced in large volumes. b. In a process layout, products can be moved from one type of machinery to another in whatever sequence is necessary. c. In a process layout, goods or services stay in one place, and employees, machinery, and equipment are brought to a fixed site when needed. d. It groups different types of machinery and equipment into self-contained cells.

b. In a process layout, products can be moved from one type of machinery to another in whatever sequence is necessary.

CH.17: Which of the following is a difference between operations management in the 1960s and the 2010s? a. Unlike in the 2010s, operations management in the 1960s focused on sustaining the environment. b. In the 1960s, the focus of operations management was on mass production, whereas in the 2010s, the focus of operations management is on mass customization. c. In the 1960s, most of the labor force was employed in the service industry, whereas in the 2010s, most of the labor force is employed in the goods-producing sector. d. Unlike in the 1960s, operations management in the 2010s focuses on simplifying supply chains.

b. In the 1960s, the focus of operations management was on mass production, whereas in the 2010s, the focus of operations management is on mass customization.

CH.6: Which of the following statements best describes an S corporation? a. It is a form of corporation that can be formed without filing any paperwork with a government agency. b. It is a form of corporation that avoids double taxation by having its income taxed as if it were a partnership. c. It is a form of corporation where the number of stockholders is unlimited. d. It is a form of corporation that does not seek to earn a profit and differs in several fundamental aspects from C corporations.

b. It is a form of corporation that avoids double taxation by having its income taxed as if it were a partnership.

CH.14: In the context of organizational structure, which of the following statements is true of the span of control? a. It refers to the degree of centralization in a company. b. It refers to the number of people a manager supervises. c. It is the number of global shareholders of a company. d. It is the number of subsidiaries controlled by an organization

b. It refers to the number of people a manager supervises.

CH.17: Which of the following exemplifies an improvement in a servicescape? a. Bob outsources desserts for his restaurant as the vendor makes them better than his chef. b. Nabila changes the layout of her bookstore to facilitate easy navigation. c. Rubin introduces poka-yokes to reduce defects in the products manufactured by his company. d. Mandy automates the process of shelving goods in her grocery store.

b. Nabila changes the layout of her bookstore to facilitate easy navigation.

CH.6: In the context of formation, which of the following is a similarity between limited liability companies (LLCs) and corporations? a. Like in corporations, owners of most LLCs are called stockholders. b. Similar to the bylaws of a corporation, organizers of most LLCs draft an operating agreement. c. Similar to corporations, LLCs do not have to pay filing fees in the state where the business is organized. d. Like corporations, LLCs are not required to file a certificate of formation.

b. Similar to the bylaws of a corporation, organizers of most LLCs draft an operating agreement.

CH.14: Which of the following is a difference between strategic planning and operational planning? a. Strategic planning involves determining specific action steps, whereas operational planning involves determining broad action steps. b. Strategic planning is done by top-level managers, whereas operational planning is done by first-line managers. c. Strategic planning deals with day-to-day manufacturing activities, whereas operational planning deals with determining a vision. d. Strategic planning involves defining the short-term objectives of a firm, whereas operational planning involves defining the long-term objectives of a firm.

b. Strategic planning is done by top-level managers, whereas operational planning is done by first-line managers.

CH.17: Which of the following statements is true of poka-yokes? a. They are quite advanced quality measures, and their application requires a high level of expertise. b. They help workers quickly catch and correct mistakes in production processes. c. They refer to the negative experiences of a customer resulting from poor quality of a servicescape. d. They allow engineers to test, analyze, and improve the quality of their designs through computer simulations.

b. They help workers quickly catch and correct mistakes in production processes.

CH.17: Which of the following statements is true of just-in-time (JIT) techniques? a. They provide protection against supply disruptions. b. They result in very small inventory of finished goods. c. They require minimum coordination across the supply chain. d. They necessitate the maintenance of a large work-in-process inventory.

b. They result in very small inventory of finished goods.

CH.6: Which of the following is a disadvantage of general partnerships? a. Double taxation b. Unlimited liability c. Complex formation procedures d. Close monitoring by the Internal Revenue Service

b. Unlimited liability

CH.14: Which of the following is a Theory X assumption about workers? a. The intellectual capacity of the average worker is underutilized in the workplace. b. Workers dislike work and will do everything they can to avoid it. c. The capacity for imagination and ingenuity is widely distributed in the population. d. Workers can accept and even seek responsibility.

b. Workers dislike work and will do everything they can to avoid it.

CH.6: Max and Lucio start a retail store. They take turns to manage the store, and they share the profits equally. Max and Lucio understand that they are personally liable for any debts or losses that the store may incur in the future. This type of business venture exemplifies a _____. a. corporation b. general partnership c. sole proprietorship d. limited liability company

b. general partnership

CH.17: One potential drawback of just-in-time (JIT) production is that: a. it can leave workers susceptible to repetitive stress injuries. b. it can leave producers vulnerable to supply disruptions. c. it is likely to result in overstocking of finished products. d. it is likely to result in high inventory of work in process.

b. it can leave producers vulnerable to supply disruptions

CH.6: A key advantage of a C corporation is: a. its ability to avoid double taxation. b. its ability to raise large amounts of financial capital. c. the ease with which it can be formed and operated. d. minimal paperwork.

b. its ability to raise large amounts of financial capital.

CH.6: Silva and Ron start a taxi service together. Ron only invests money in the venture and does not actively participate in managing the business. Silva, on the other hand, manages the venture entirely. According to the agreement between Silva and Ron, Silva is personally responsible for the debts and losses while Ron takes responsibility of the debts only up to a certain amount. The agreement also mentions that Ron cannot participate in the management of the business. In this scenario, Ron and Silva have formed a _____. a. general union b. limited partnership c. corporation d. sole proprietorship

b. limited partnership

CH.14: Technodrome Inc. is a manufacturer of electronic goods. During the research and development stage of a new product, representatives from multiple teams and specialty areas work together on a temporary basis to create innovative technologies. In this scenario, Technodrome exemplifies a _____. a. line organization b. matrix organization c. bureaucratic organization d. line-and-staff organization

b. matrix organization

CH.14: Managers who use a Theory Y approach assume that: a. the intellectual capacity of the average worker is overutilized in the workplace. b. people can exercise self-direction and self-control to meet company goals. c. coercion is vital to get people to work toward company goals. d. people prefer to be directed and avoid responsibility.

b. people can exercise self-direction and self-control to meet company goals.

CH.14: An assumption of Theory Y is that: a. workers dislike work and will do everything they can to avoid it. b. work is as natural as play or rest. c. people prefer to be directed. d. coercion and threats are vital to get people to work toward company goals.

b. work is as natural as play or rest.

CH.17: Which of the following is a similarity between total quality management (TQM) and Six Sigma? a. Both have simple methods of application that require little expertise. b. Both rely on expensive training and expert guidance. c. Both rely on teams of workers to carry out specific projects to improve quality. d. Both aim to reduce defects of any operation to a level of no more than 3.4 per million opportunities.

c. Both rely on teams of workers to carry out specific projects to improve quality.

CH.14: Which of the following is the primary contribution of middle managers? a. Articulating a company's vision, establishing its priorities, and allocating resources b. Supervising day-to-day production operations c. Coordinating teams and special projects with their peers from other departments d. Training, motivating, and evaluating nonmanagement employees

c. Coordinating teams and special projects with their peers from other departments

CH.6: Which of the following is an advantage of sole proprietorships? a. Maximized ability to attract talented employees b. Limited workload and reduced responsibilities c. Ease of formation d. Permanence of the venture

c. Ease of formation

CH.17: Brenden Corp. manufactures products at the lowest cost possible. It strives to keep its manufacturing costs low and its product prices competitive. It does not provide technical support for its products as providing such support would add to its cost without earning any profit. Given this information, which of the following statements is most likely true of Brenden Corp.? a. It focuses primarily on benefits of the product. b. It focuses on giving customers more for their money. c. It focuses on efficiency at the expense of effectiveness. d. It focuses primarily on effectiveness and ignores value.

c. It focuses on efficiency at the expense of effectiveness.

CH.6: In the context of corporate restructuring, which of the following is a common objective of a vertical merger? a. Reducing risk by making a firm less vulnerable to adverse conditions in any single market b. Increasing size and reducing competition within an industry c. Providing tighter integration of production and increased control over the supply of crucial inputs d. Improving efficiency by eliminating duplication of facilities and personnel

c. Providing tighter integration of production and increased control over the supply of crucial inputs

CH.14: Which of the following is a Theory Y assumption about workers? a. The intellectual capacity of the average worker is overutilized in the workplace. b. Coercion and threats are vital to get people to work toward company goals. c. The capacity for imagination, creativity, and ingenuity is widely distributed in the population. d. People prefer to be directed and avoid responsibility.

c. The capacity for imagination, creativity, and ingenuity is widely distributed in the population.

CH.17: Ezequiel, a product developer working for Deccan Aviation Inc., wants to test his designs for flaws and further optimize them before the production of aircrafts begins. In this scenario, Ezequiel should most likely use _____. a. computer-aided design software b. computer-aided processing software c. computer-aided engineering software d. computer-aided manufacturing software

c. computer-aided engineering software

CH.17: Carl, an engineer at an automobile plant, has designed a new type of suspension component. He now wants to create a prototype of his design. To do this, he uses a software that takes the designs of the product and creates programmed instructions that robots can follow to produce the prototype. In the given scenario, Carl most likely uses _____. a. computer-aided design software b. computer-aided engineering software c. computer-aided manufacturing software d. computer-aided processing software

c. computer-aided manufacturing software

CH.14: Autocratic leaders typically: a. give their followers the freedom to set their own goals. b. solicit and incorporate input from their followers. c. issue orders without consulting their followers. d. share power with their followers.

c. issue orders without consulting their followers.

CH.6: In the context of franchising, a Franchise Disclosure Document (FDD): a. is sent to a franchisee when the franchisee fails to adhere to the production standards specified by the franchisor. b. restricts potential franchisees to contact other franchisees under the same franchisor. c. must be provided to the franchisee at least 14 calendar days before the franchise agreement is signed. d. contains details about the annual profits made by the franchisee.

c. must be provided to the franchisee at least 14 calendar days before the franchise agreement is signed.

CH.17: Otom, a car manufacturer, focuses on total quality management (TQM). To ensure that its products are of superior quality, it incorporates certain methods into its production process that enable its workers to identify and eliminate errors at the production stage. In the given scenario, Otom most likely uses _____. a. tapered integration b. vertical integration c. poka-yokes d. 5S principles

c. poka-yokes

CH.17: Stylon Inc., a hair salon, sells an exclusive line of hair conditioners and also provides haircut and styling packages. In the given context, Stylon Inc. offers: a. only tangible goods. b. durable as well as perishable goods. c. tangible as well as intangible products. d. only intangible products.

c. tangible as well as intangible products.

CH.17: Kyle Chem Inc., a multinational company, manages all its value chain processes within the organization instead of contracting out the work to other specialized firms. The given scenario best exemplifies _____. a. outsourcing b. aggregate planning c. vertical integration d. offshoring

c. vertical integration

CH.14: In the context of job enrichment, in task significance, _____. a. workers have freedom and authority regarding their jobs b. workers are able to perceive task objectives clearly c. workers understand the impact of their tasks on others d. workers complete tasks with clear beginnings and endings

c. workers understand the impact of their tasks on others

CH.17: Declan Inc., an airplane manufacturing company, manufactures a standard model of airplane. To improve efficiency, the company focuses on minimizing waste in all spheres of production. Therefore, it only buys materials from suppliers who provide customized raw materials and hires workers who are trained in various manufacturing processes. In the given scenario, which of the following is most likely to be true of Declan Inc.'s production approach? a. Declan Inc. focuses on mass production. b. Declan Inc. has a process layout. c. Declan Inc. has a product layout. d. Declan Inc. focuses on lean production

d. Declan Inc. focuses on lean production

CH.17: Which of the following statements is true of computer-aided engineering (CAE) software? a. It creates programmed instructions that robots must follow to produce a product. b. It can be used by engineers to create 3-D drawings. c. It provides powerful drafting tools that enable engineers to create and edit blueprints. d. It can help engineers find and correct design flaws before production

d. It can help engineers find and correct design flaws before production

CH.14: Which of the following statements is true of an organization chart? a. It helps management evaluate the organization in terms of external strengths and weaknesses. b. It is a concise graphical representation of the organization's protocol. c. It is a graphical representation of the profits and revenues of all departments within the organization. d. It helps employees understand how they and their jobs fit within the broader organization.

d. It helps employees understand how they and their jobs fit within the broader organization

CH.17: Which of the following statements is true of vertical integration? a. It involves arranging for other organizations to perform value chain functions that were previously performed internally. b. It allows a firm to shed functions it does not perform well in order to focus on its areas of strength. c. It frees people, money, and other resources that had been tied up in insourced activities, allowing these resources to be employed in more profitable ways. d. It occurs when a firm attempts to gain more control over its value chain by developing the ability to perform processes previously performed by other organizations in the chain.

d. It occurs when a firm attempts to gain more control over its value chain by developing the ability to perform processes previously performed by other organizations in the chain.

CH.14: In the context of expectancy theory, which of the following is most likely to ensure that employees remain motivated? a. Providing employees the same perks as their subordinates b. Creating jobs that are challenging c. Taking into consideration the behavior of employees while evaluating them d. Sustaining the link between effort, performance, and reward

d. Sustaining the link between effort, performance, and reward

CH.6: Which of the following is a disadvantage of sole proprietorship? a. The formation of the company requires investing a large sum of money. b. The owner cannot have complete control over the management of the company. c. The profit gets shared equally among all employees. d. The company legally ceases to exist if the owner withdraws.

d. The company legally ceases to exist if the owner withdraws.

CH.14: Which of the following statements is true of democratic leaders? a. They hoard decision-making power for themselves. b. They issue orders without consulting their followers. c. They allow their followers to make final decisions. d. They incorporate input from their followers.

d. They incorporate input from their followers.

CH.14: Which of the following statements is true of centralized companies? a. They have higher employee morale than decentralized companies. b. They typically give decision-making power to multiple people across the organization. c. They typically respond quickly to customer needs. d. They tend to have a strong corporate image.

d. They tend to have a strong corporate image.

CH.6: In the context of C corporations, which of the following is a difference between preferred stockholders and common stockholders? a. Unlike preferred stockholders, common stockholders can opt out of the corporation without prior notice. b. Unlike preferred stockholders, common stockholders are entitled to evade taxation on their income. c. Unlike preferred stockholders, common stockholders have the right to float shares of the company. d. Unlike preferred stockholders, common stockholders normally have the right to vote in stockholder meetings.

d. Unlike preferred stockholders, common stockholders normally have the right to vote in stockholder meetings.

CH.17: Derick is a regular customer of Looney's, a departmental store. He feels at ease in the store owing to the lighting and soothing background music. He also finds the layout of the store easy to navigate. From the given information, it can be concluded that the departmental store has _____. a. high service integration b. a good product layout c. a cellular layout d. a well-designed servicescape

d. a well-designed servicescape

CH.6: Gerrilyn works for a business firm that manufactures breakfast cereal. The firm is owned by many individuals who are not personally responsible for any debts or losses incurred by it. Legally, the firm is considered a separate artificial person. In this scenario, Gerrilyn is working for a _____. a. proprietorship b. regulatory body c. partnered company d. corporation

d. corporation

CH.6: Check My Work In the context of the various forms of operating a business, instant brand-name recognition is a benefit ensured by a: a. C corporation. b. sole proprietorship. c. limited liability company. d. franchise.

d. franchise.

CH.17: fruits. In the given context, Christie bought _____. a. intangible products b. processed goods c. complementary products d. nondurable goods

d. nondurable goods

CH.17: Lisa, the owner of a sports store, places an order for football merchandise before the beginning of the new season. She orders a larger quantity than what she estimates will be required. In this scenario, Lisa most likely does this because she wants to: a. minimize tied-up funds. b. invest money in storage equipment. c. avoid additional holding costs. d. reduce the chance of stock-outs and lost sales

d. reduce the chance of stock-outs and lost sales

CH.14: In the context of the strategic planning process, after evaluating its competitive position, an organization should: a. gather information about internal and external opportunities. b. establish its core purpose and values. c. define its mission. d. set goals for itself.

d. set goals for itself.

CH.6: Thiago has spent a long time working in various commercial establishments owned by some of his close relatives. He now wishes to establish his own business, a sporting goods retail store. Thiago plans to manage the store single-handedly. In the context of the various business ownership options, Thiago's store will be an example of a: a. statutory close corporation. b. limited liability company. c. conglomerate. d. sole proprietorship.

d. sole proprietorship.

CH.14: A downside to centralization is that centralized companies: a. tend to have a weak corporate image. b. give decision-making power to too many people in the organization. c. have different customer approaches across the front lines. d. typically respond more slowly to customer needs.

d. typically respond more slowly to customer needs.