Intro into Business: Midterm Exam

Select the statement that demonstrates a characteristic of a leader.

A leader has a vision and rallies others around the vision.

Which statement best illustrates why we say, "The role of management is evolving"?

Contemporary managers will focus on collaboration, and continue to emphasize the team approach to work.

Describe a company with a positive corporate culture.

It emphasizes service to others, especially customers.

Which statement is an example of effectively managing diversity?

Legal and illegal immigration has prompted local governments to change signs, brochures, and websites to include other languages.

Which approach suggests that a manager believes that employees should be involved in both defining problems and in designing the solutions?

McGregor's Theory Y

There are many reasons why small-business owners refuse to go international. What is one of those reasons?

Paperwork is often overwhelming.

__________ is the process managers use to continually monitor all phases of the production process to ensure that quality is being built into the product from the beginning, and to make sure products meet standards all through the production process.

Statistical quality control (SQC)

A manager's need to exert tight controls on subordinates (span of control) is most accurately captured by which statement?

The span will narrow at higher levels of the organization, because work becomes less standardized and managers and workers need more face-to-face communication.

Twenty years ago, your parents invested in shares of a large computer company. As the years have gone by, the investment has grown. However, if the company should go out of business and declare bankruptcy, what would happen to your parent's investment?

Your parents would only lose the value of their shares.

For the last several years, a country has been moving from a communist system to a more mixed economic system. What would most likely occur in that country?

a decrease in the level of government involvement in trade

The United States, one of the world's largest exporting nations, has bought more goods from other nations than it has sold since 1975. This is known as

a trade deficit.

Brandon, an experienced backpacker, didn't find the flavor or selection of most dehydrated food appetizing, so he set out to create something better. Brandon, a food chemist, and his college roommate, Travis, now a chef, collaborated to produce some food choices and sell them in upscale outdoor outfitters. Travis asked Cody, a marketing professional who had created a new logo and menus for a restaurant if he would be interested in the venture. This group is referred to as

an entrepreneurial team.

Kristin recently accepted a position at a major university. One of the first things her supervisor provided her with was a large white notebook that contained rules and regulations on just about every aspect of the university's business. As a recent business graduate, Kristin realized that the university operated in a(n) __________ environment.

bureaucratic

In a free-market economic system, if consumers perceive the price for a state-of-the-art smartphone as too high for the value received, they are likely to avoid buying it. In the same light, if the

consumer's desired price is too low, producers may limit the amount produced.

A steel plant has long production runs to make steel beams, which can be made available on demand. These finished products turned out over time are considered the results of a(n)

continuous process

In a __________, members democratically control the business by electing a board of directors that hires professional management to run the business.

cooperative

The CPI (consumer price index) minus food and energy costs measures

core inflation.

Ian, who works for an American company, has just transferred to China to begin a year-long special project working with 15 Chinese engineers. Much to Ian's surprise, he found out after drafting his work schedule and deadlines that Chinese New Year was approaching and employees would be off work for a week. This holiday is an example of a society's

culture

To more quickly respond to customer needs, Urban Insurance Co. is changing its organizational structure to give more authority and responsibility to field managers located across the country. These managers spend time with customers and know what the customers need right away. It appears that the company is moving toward a more __________ structure.

decentralized

The first step in developing a knowledge management system is

determining what knowledge is most important.

A country exports $75 million worth of steel to the United States and sells it for $60 million in order to establish a new market in the United States. This is an example of

dumping

The idea of facility layout is to

have offices physically arranged in the best position to enable workers to most efficiently produce goods and services for their customers.

Jaxon works for a company that promotes an entrepreneurial culture. Employees are encouraged to discuss new ideas. Development time is provided on the job for those ideas that float to the top. These employees who use their creative talents to generate ideas and create products within large companies are called

intrapreneurs.

Management expert Peter Drucker said the most important factor of production in our economy is, and always will be,

knowledge.

New design and production techniques have

made it possible to custom-make products in response to customer demand.

Choose the best reason for countries to participate in foreign trade.

no nation can produce all the products its people want and need

Some companies make long-term commitments to one cause, such as McDonald's Ronald McDonald Houses for families whose critically ill children require treatment away from home. This dimension of social responsibility that includes charitable donations is called corporate

philanthropy.

In the past, the major purpose of organizational design was to facilitate the needs of management in making their job easier, rather than

pleasing customers.

Besides the shift of jobs to foreign countries, outsourcing has other drawbacks, such as

questionable safety and quality issues with finished products.

In his search for a franchised business that would satisfy his passion for the outdoors and earn him a decent living, Crispin noted that the shared profit criterion required of franchisors had significant variance. Some required franchisees to pay 7 percent of their monthly revenues to the franchisor. Others required 4 percent of the profits. In business, we refer to this obligation as a

royalty

Frederick Taylor believed the best way to improve worker productivity was to

scientifically determine the most efficient way to perform a task and then teach people exactly how to perform it.

A firm's management purchases all the issued and outstanding stock of the firm and takes the company off the stock market. The management of this company has engaged in

taking the firm private

Division of labor means

tasks are divided into areas of specialization among a group of employees.

Although the business plan has a great amount of detail and requires thoroughness, a well-explained business idea will come to life almost immediately in which part of this document?

the executive summary

Sovereign wealth funds (SWFs) are a growing form of foreign direct investment. The size of these funds and the fact that they are investments from government coffers of other nations might be a cause for concern. More specifically, some fear

the governments who offer these funds may obtain sensitive technologies or gain control of strategic resources.

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).

While not knowing how to get started and cultural differences make the prospect of global trade difficult for small businesses, there is one bright spot on the horizon that has brought global trade closer to home. Small businesses can now

use technology such as PayPal to fulfill orders, which gives them some assurance of payment.

Eleanor and her best friend Julie Ann, from beauty college, are starting a salon together. Both stylists have worked for other salons but have no experience working for themselves. Before entering into a partnership, the two friends should first

put all terms of the partnership into writing in a partnership agreement.

The Great Recession, a sharp economic downturn that begun in 2008, brought high unemployment, increased business failures, and an overall drop in living standards. According to economist Joseph Schumpeter, which business cycle occurred when the economy began to stabilize and grow?

recovery

Cho started out with one small cupcake shop. Her business has grown so much that she now has two other shops across town. Cho has found that having three locations has greatly increased her production levels. She also notices that the price she pays for supplies (flour, butter, sugar, and packaging materials) has gone down considerably since she can now buy these items in bulk quantities. This exemplifies the principle known as

economies of scale.

Entrepreneurs emphasize the importance of believing in your own ideas because in the process of developing those ideas you are likely to hear from skeptics. Characteristically, they also know that success or failure is "on them." These attributes are described as

self-directed and self-nurturing.

"We believe in creating loyal customers by providing a superior experience at a great value. We are committed to direct relationships, providing the best products and services based on standards-based technology, and outperforming the competition with value and a superior customer experience." This statement is a part of Dell's

mission statement

Keegan's wireless bill continues to increase with the price of her new phone, data charges, and long-term contract. In her geographical region, there are few choices in wireless carriers and monthly costs are very similar. What kind of competition exists here?

oligopolistic competition

Jamal runs a successful small business in the United States and has decided to expand internationally. When Jamal attempted to obtain the necessary government permit in a developing country, he most likely learned that

corrupt public officials expect him to pay bribe money to get the permit.

What is the best reason for a business to be managed ethically?

An ethically managed business helps to reduce employee turnover.

At Daisy's Gifts, Daisy and her assistant stocked the shelves, marked each item with a price, and kept a sales log so they would know when it was time to reorder. Daisy's unique merchandise attracted shoppers and her shop became quite popular. When Daisy found herself doing paperwork rather than serving her customers, she most likely decided to

embrace technology.

If a company wanted to link the computerized functions of all its divisions and subsidiaries of the firm into an integrated software program that uses a single database in order to develop a more integrated system that improves customer service, it would most likely use

enterprise resource planning.

Miles lives in an area where labor is plentiful and locations for start-ups are relatively cheap. He is also confident that he can find start-up funds for a graphic arts business. As he evaluates the opportunity for his proposed venture, which two other factors of production does he need to succeed?

entrepreneurship and knowledge

Most businesses follow a logical process when performing the planning function. It is important to understand __________ before creating long-term goals, objectives, and strategies.

the current situation

Which statement best describes a capitalistic nation?

Most or all of the factors of production and distribution are privately owned and operated for a profit.

Small businesses often have advantages in international markets. One advantage is

individualized customer service as opposed to impersonal corporate bureaucracies.

Ian works in the IT department at Pleasant Valley Health Partners. He feels encouraged to find his own solutions to problems, and to implement those solutions when practical. The programmers and data analysts work with little supervision because management feels they are committed and creative workers. This policy reflects a __________ attitude about workers.

theory Y

Encouraged by the Sarbanes-Oxley Act, individuals who report unethical or illegal behavior within an organization are

whistleblower

According to Herzberg, what is a hygiene factor?

working conditions

When Betsy Blackwell bought a Mighty Maid franchise, she became a

franchisee

Which statement reflects the difficulty companies face when requiring international suppliers to follow environmental and human rights standards set by U.S. firms?

Both economic conditions and culture enter into the discussion of fairness concerning international suppliers who do business with U.S. firms.

Which BRIC country has not lived up to expectations due to a slowing economy, political and social problems, and being labeled as the world's most corrupt major economy?

Russia

A mobile veterinary business, Portable Paws, Inc., created a mission statement long before it opened its doors for business. The mission statement referred to the unique characteristic of the business: a traveling pet unit whose veterinarians went to the home of the pet owner, rather than the pet owner bringing the pet to the clinic. What other criteria should be considered for the mission statement?

a description of the customers it serves and a statement about its social responsibility to the area where it operates

Which leadership style focuses on making decisions without consulting others?

autocratic

When your profitable franchise fails simply because other similar franchisees have failed, this is known as the

coattail effect.

The impact of war and terrorism on U.S. business is that

companies have increased organizational costs, including insurance costs.

According to the text, ethical behavior begins with

each of us

Alejandro has many business ideas that could satisfy the unfulfilled needs of people who live in his community. However, there are laws that govern the type of businesses that private citizens can own and business taxes are high because the government subsidizes many social programs in his nation. In this case, challenges in the __________ environment increase the risk of Alejandro starting a business.

economic and legal

Janette works at an insurance fraud company rewriting investigator reports. After seven months, Janette was promoted to lead editor and became responsible for delegating the editorial department's workload among editors and training new editors. At Janette's annual review, her manager praised her work and how she had handled her additional workload. She received a $0.20 raise per hour. Her manager told her she needed to further prove herself before receiving an actual title or any additional money. When Janette returned to her desk, she immediately planned to call in sick the next day and to start searching for a new position. What theory most closely applies to Janette's present attitude?

equity theory

When the value of exports from a country exceeds the value of imports into that country, there is a(n)

favorable balance of trade.

The primary concerns when first starting your business are

financing and planning.

A manager at a software development company told his development group that it needed to create new payroll software for their own company. The group was given the system requirements and deadline for the first testing phase and told to work without management parameters. The company in this case is operating under a system of

free-rein leadership.

The topics of gross domestic product (GDP), the unemployment rate, and price indexes are examples of which branch of economics?

macroeconomics

What will be required for service providers to compete in the future?

maintaining close relationships with their suppliers

The evolving business environment has made __________ a critical managerial function.

managing change

Carly oversaw the work of six pharmaceutical sales managers in the northeast region of the United States. Each sales manager managed a team of 8-10 pharmaceutical sales representatives that developed relationships with doctors, clinics, hospital pharmacies, and local drug stores. Carly met regularly with four others in divisions within her company whose jobs were similar to her position. How would you describe the level of management Carly has achieved?

middle management

Made by Hand Company makes custom furniture of all kinds. The firm has evolved into a big business due to quality and innovative work. Recently, top management asked company departments to list and evaluate the kinds of socially responsible efforts conducted internally and externally in the business and to list negative occurrences that supervisors observed. Top management is essentially conducting a(n)

social audit

The benefit of using __________ to communicate a business's CSR efforts to the public is that it allows companies to reach broad and diverse groups directly in a low-cost, efficient way.

social media

Which form of business ownership is the most common in the United States?

sole proprietorship

Tess works as a patent attorney for a large manufacturing company. Tess's job is to act as an advisor to the firm's engineers to be sure they do not confront any legal issues when designing new products. Tess's position would be classified as a __________ position.

staff

Bishara wants to start a small business importing some products from her native Kenya. Before she starts, some good advice to Bishara would be to

talk with others who have been or are in the import business.

Preston, founder and president of a successful software development company, took a look around the office at his 15 employees. Rent was high in the city, and most of their clients were spread out over the United States. Preston and his business partner have strategically decided to give up their office and to adopt __________, so his employees can work remotely via computer.

telecommuting

Imagine the following: New sources of energy have become marketable and the industries involved have hired thousands to operate the emergence of new businesses. Construction companies cannot build homes fast enough for workers in the energy industry. Due to increasing salaries in several other industries that partner with energy companies, the demand for everything from food to entertainment to travel has increased. High demand has brought about shortages in some product categories. To help manage the situation in the short term,

the Fed will likely increase interest rates.

Recently, two nations experienced a trade dispute over copyright issues. Country "A" accused Country "B" of violating international copyright laws. Since both were members of __________, they appealed to this organization to mediate the dispute.

the WTO (World Trade Organization)

Jolene planned to open a pastry shop in a resort town on the East Coast. As she pondered her organizational setup, she decided she would need four employees to specialize in the creation and production of delicate pastries, and three employees to greet, serve, and sell to customers. One or two of her workers were designated as supervisors. Another preliminary organizational decision that Jolene will most likely tackle is

the allocation of resources within her operation.

Widgets, Inc., based in the United States, makes small parts for the auto industry. Over the past couple of years, Widgets has laid off many workers due to auto industry outsourcing. The federal government has imposed tariffs to discourage outsourcing. This is called

trade protectionism.

Due to his reputation for putting together powerful presentations, Mohammed was contractually hired to help a robotics firm introduce its new robotic arms and legs and their value to high net worth investors. The firm hired Mohammed strictly for this special project. At this stage of its life, the firm operates as a(n) __________, where it solicits the services of other companies on an "as needed" basis, and then releases them when the job is done.

virtual corporation

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.

Adam Smith believed that one's self-directed gain would eventually create prosperity for many, and called the process the

invisible hand

A small business

is considered small relative to other businesses in its industry.

The most basic question in an ethics-based management system is

is it legal?

The Learner Company sent field engineers to perform installation and repair on large pieces of equipment that are used in the process of making gasoline at petrochemical plants. Each day, the onsite engineer reviews the __________ to determine which parts of the project are in progress and which have been completed. This bar graph also shows the engineer which equipment must be installed before other parts are started.

Gantt chart

When an F5 tornado hit a town in southern Missouri, the people that lived there needed the basics: food, water, and shelter. The owners of Good Eats Restaurant in St. Louis drove several hours with a van of employees, equipment, and food to donate what they could to help the storm victims. The business term we use to describe this philanthropic action is __________, where a company donates what it does best to help make a situation better.

corporate social initiative

Nick and Ethan would like to start a new business selling a product new to the United States. They have done a considerable amount of research on this product and think it would be successful. However, they are still concerned about the risk of a new venture and both would like to avoid losing any personal assets. They should organize their firm as a

corporation

Theo is part of a team that builds and assembles wind turbines. Because the turbines are so large, the team travels to the building in which they are housed so all workers can congregate around the turbine engine, blades, and controller to complete its construction. What facility layout is most appropriate for this type of process?

fixed-position layout

Government and business leaders are being held to

higher ethical standards than in the past.

Johan was a newly hired attorney for Crontel Manufacturing, Inc. Even though he reported directly to the president of the company, Johan noticed that the president always had time to converse with the director of sales, calling on him to get a pulse on legal/regulatory issues that, as the company attorney, Johan probably could have handled. Johan also noted that the HR manager's administrative assistant was the go-to person for a number of things that would make life easier at work. Johan was beginning to recognize the __________ culture at Crontel Manufacturing.

informal organizational

An HR director was reviewing the job description for a new position in the information technology department of his company. He quickly jotted down a few comments that he would later share with the department manager. Among other things, his comments included suggestions for incorporating more skills variety into the job and a little more autonomy as to how the job might be accomplished from start to finish. As a student of business, you recognize that the HR director believes that a person holding this position would be motivated by

job enrichment.

Keen, an operations manager at a wood processing plant, notices that there is significant scrap and inefficiencies in the plant's operations. Which technique would he most likely be interested in implementing?

lean manufacturing

When Matt, John, and Jevonte lost their jobs during the recent recession, they pooled their resources, borrowed a little more, and bought a couple of houses to renovate. All three were concerned about the risk involved in owning their own business, particularly the risk of losing personal assets. As their advisor, which form of business ownership would you recommend?

limited liability company

Rob and José created the first video doorbell. For the last three years due to its popularity, the company has expanded by producing several types of cameras. This has necessitated renting space and hiring many employees—both on the technological and customer service sides of the business. Most would agree that they have a superb product, but in order to grow, the company needs more structure. Together, they agreed to hire Meg to join the executive team as VP of Human Resources. Meg quickly began performing the __________ function, where she created well-structured departments and hired skilled people to perform the various functions of the business.

organizing

Vorde Auto is a car company that makes four models—a hybrid sport utility, a sports car, a four-door sedan, and a compact car. Employees at Vorde basically work on only one type of vehicle; each type has an independent product development process and is marketed separately to better serve the customers. Vorde Auto is departmentalized by

product

When Micha started his window-washing business, he wanted to keep things simple. He liked the idea of being his own boss and the possibility of leaving the business one day to his son. He chose the type of business that was easy to start, allowed him to keep company profits, and would not have any special taxes assessed. Micha's financial resources were limited, but so were his concerns; after all, "he was the business." Micha's business is most likely a(n)

sole proprietorship.

A brother and sister team, Anthony and Rosa, took over the family's Italian restaurant business from their father. Rosa operates one of the three locations, keeps the firm's books, and orders supplies and equipment for all three locations. Anthony operates the other two restaurants. Anthony thinks he should get two-thirds of the company profits because he is responsible for the profitability of two out of three locations. Rosa sees it differently because she feels her responsibilities span the entire business. What's most important for them to remember in their situation is

the fact they both share unlimited liability, so if one or the other failed to meet his/her financial commitment, the other partner would also be liable for all debts.

A large computer hardware manufacturer purchased a company that develops computer-based software training, among other types of computer-based training. The computer manufacturer has been looking for just such a company that could open up opportunities for them to diversify and grow both businesses. This strategic decision bringing the two companies together is called a

vertical merger