Business Principles - Chapter 3
When two or more people legally agree to become co-owners of a business, the organization is called a(n)
partnership
Corporations issue _____ to shareholders and this allows ownership to change when it is sold.
stock
A key benefit that only corporations can offer to attract skilled employees is:
stock options
Which statements are accurate as related to corporate taxation?
stockholders pay income tax on the dividends they receive double taxation occurs
A partnership______ can spell out the requirements of terminating a partnership
agreement
Franchises must follow the franchise_______, which limits the control of the operating by the franchisee through regulations and guidelines
agreement
Which of the following are considered licensors' benefit of licensing?
1) Gaining new revenues 2) The foreign license purchases items (start-up and/or supplies) from the licensor 3) Licensors spend little or no money to produce products.
Which of the following are common markets?
1) Mercosur 2) ASEAN 3) EU
Which are attributes of a master limited partnership
1) acts like a corporation 2) traded on the stock exchange 3) taxed like a partnership
Select all reasons that disagreements can ruin a partnership
1) arguing over profits 2) disagreements over workload 3) opposing management styles
Which of the following illustrates the difficulties in enforcing U.S. ethical standards on foreign countries.
1) banning child labor when the child's salary is needed to support the family. 2) sometimes what would be considered as bribes in the united states are considered gifts in other countries.
The benefits associated with strategic alliances is that they provide broad access to:
1) capital 2) technical expertise 3) markets
The Uniform Partnership Act defines the three key elements of a general partnership as:
1) common ownership 2) shared profits and losses 3) participation in operations
Which of the following are benefits associated with offshore outsourcing?
1) companies can create efficiencies 2)companies can focus on business areas where they can expand and grow.
Which of the following are benefits associated with offshore outsourcing?
1) companies can focus on business areas where they can expand and grow 2) companies can create efficiencies.
In order to protect the brand name and image, the franchisor has right management ______
1) controls 2) standards
Which of the following are dimensions of social performance?
1) corporate responsibility 2) corporate philanthropy 3) corporate policy
Which of the following are examples of outside stakeholders that must be told about a company's ethics program?
1) distributors 2) customers 3) suppliers
Among the advantages of farm cooperatives for their members is that they:
1) do not pay taxes as corporations do 2) increase economic power
What was the primary benefit for the European Union (EU) of adopting the euro in 1999?
1) eliminating currency conversions
Darla's bicycle ship in the United States is experiencing a slowdown in its growth. She knows the global market offers many opportunities. Which of the following are ways Darla's business could engage in the global market.
1) export bicycles to retailers in Australia 2) import materials from Russia 3) create an online sales site that ships globally
A business can legally compete in global markets by using which of the following strategies?
1) exporting 2) franchising 3) licensing
Home-based franchise have many advantages such as:
1) extra time for family activities 2) low overhead expenses 3) relief from the stress of communicating
LLCs do have to submit articles of organization and an operating agreement, but do not have to:
1) file written resolutions 2) hold annual meetings 3) keep minutes
Which of the following countries are members of the Central American Free Trade Agreement CAFTA
1) guatemela 2) nicaragua 3) costa rica 4) honduras
Which of the following are functions of exports assistance centers (EACs)
1) hands-on exporting assistance 2) trade-finance support
Which of the following are risks of licensing?
1) if a product experiences remarkable growth, significant profits will go to the licensee. 2) trade expertise is vulnerable to being stolen
Companies that try to act in a socially responsible way are likely to focus on such activities as:
1) increasing diversity of their workforce 2) providing safety equipment and training for their workers 3) using recyclable packaging.
Which of the following are U.S. jobs that are being disrupted by the "Second wave" of offshore outsourcing
1) information technology 2) accounting 3) health care.
Which of the following exemplify possible outcomes of insider trading?
1) insider trading charges are brought 2) the SEC brings charges against those involved 3)Investors purchase stock only to see the price plummet as the real information is made public.
Which of the following are considered benefits of contract manufacturing?
1) it can be used to temporarily meet an unexpected increase in orders. 2) labor costs in foreign market may be lower than the labor costs in the firm's host country.
Which of the following are considered benefits of contract manufacturing?
1) it enables a producer or business to experiment in a new market without incurring heavy start-up costs. 2) it can be used to temporarily meet an unexpected increase in orders. 3) labor costs in foreign market may be lower than the labor costs in the firm's host country.
What are some of the disadvantages of operating a franchise?
1) large start-up costs 2)Restrictions on selling 3) shared profit
Select the attributes of a corporation
1) legal entity 2) state chartered 3) liability separate from owners
Which of the following are likely benefits of exporting?
1) less intense than domestic competition 2) increased number of potential customers. 3) increased sales and revenues.
Which of the following are effects of trade protectionism
1) limitation of imported goods and services 2)domestic producers will have better opportunity to survive 3) preserving local jobs
Select the disadvantages of a sole proprietorship
1) limited financial resources 2) overwhelming time commitment 3) unlimited liability
In what ways will globalization impact U.S. businesses
1) loss of jobs in manufacturing 2) increased competetition
What are some advantages of franchising?
1) lower failure rate 2) recognized name 3) personal ownership
In order to qualify to become an S corporation, a company must have:
1) no more than 100 shareholders 2) shareholders who are individuals or estates
Select those items considered fringe benefits that people working for a company are likely to receive but a sole proprietor has to develop on his own
1) paid sick or vacation leave time 2) a pension plan 3) paid health insurance
Select ways an LLP deals with liability for partners
1) partners are not held liable for each other's actions 2) when a partner is sued individually for malpractice, it does not affect other partners. 3) liability is limited to losing only personal assets directly related to personal acts.
Companies such as Sears and Dow Chemical have tried to influence their international supplies by:
1) refusing products made by prison labor 2)requiring they conform U.S. standards for pollution and safety.
Which of the following are negative effects associated with the establishment of NAFTA
1) safety conditions for workers in Mexico continue to be poor 2) an estimated 680,000 U.S. manufacturing jobs were lost.
Unethical behavior in business, especially in the real estate and banking industries, has resulted in:
1) severe financial crisis 2) lack of trust in the free market.
The benefits of creating a joint venture when doing business internationally include:
1) shared marketing expertise 2) access to restricted local markets 3) shared technology
Ending a partnership can be difficult because of problems deciding:
1) the worth of a retiring partner's share 2) how to distribute assets 3) how a partner can retire
Which of the following are functions of the World Trade Organizations?
1) to mediate trade disputes among nations 2) to oversee cross-border trade issues.
Which of the following are reasons why some government establish trade protectionism?
1) to save local jobs 2) to guard against dumping 3) to allow domestic producers to survive and grow 4) to avoid foreign competition
Which of the following are considered to be positive effects of NAFTA?
1) trade volume among the three partners has expanded significantly 2) the value of U.S. exports to NAFTA partners has increased.
From the list below identify the groups considered to be a type of watchdog group
1) union officials 2) environmentalists 3) customers
Which of the following are possible ways offshore outsourcing could have a negative impact on the home country?
1) wages fall 2) reduced product quality 3) permanent loss of jobs
Which of the following are changes induced by NAFTA?
1)The trade volume among the United States, Canada, and Mexico more than tripled. 2)The value of U.S. exports to NAFTA partners has increased
A sole proprietorship has a limited life span unless:
1)it is taken over by an heir 2) it is sold to someone else
Rank the order in which members of a corporation are chosen in order to separate ownership from management. Start at the top of the managerial hierarchy
1)owners/stockholders elect board of directors 2) board of directors hire officers of the corporation 3)officers hire managers of the corporation 4) managers hire employees
According to recent U.S, Census Bureau research volunteerism is at an all time high, but
3 out of 4 citizens do not give any time to the communities in which they live.
Minority-owned businesses are growing at more than _____ times the national rate
6
The________ Economic Community was established in 1967 in Thailand to create economic cooperation among its five original members (indonesia, Malaysia, Philippines, Singapore, and Thailand)
ASEAN
______-_______ ethics codes emphasize preventing unlawful behavior by increasing control and penalizing wrongdoers, _____-_____ ethics codes define an organization's guiding values, create an environment that supports ethically sound behavior, and stresses shared accountability
Compliance-based and integrity-based
_______ ________ _______ is a business's concern for the welfare of society
Corporate Social Responsibility
Partnerships are less likely to survive than sole proprietorships
False
Starbucks Coffee only buys its products supply from fair trade companies to insure coffee farmers in foreign countries are not being exploited. This is a form of corporate philanthropy
False
What law prohibits "questionable" or "dubious" payments to foreign officials to secure business contracts?
Foreign Corrupt Practices Act of 1978
In 1948 government leaders from 23 nations formed a global forum for reducing trade restrictions on goods, services, ideas and cultural programs.
General Agreement on Tariffs and Trade (GATT)
The United States is charged with setting the standard for ethics and social responsibility for which one of the following reasons?
Its size and influences as a "super power"
A company similar to an S corporation but without the special eligibility requirements is an:
LLC
No stock, limited life span, and fewer incentives are disadvantages of a(n)
LLC
_______ protect people from fraud, theft, and violence, while _____ are used to decide how we treat others responsibly according to society's views of right and wrong.
Laws ethics
What is an example of a non-tariff barrier?
Restrictive standards.
The_____ protects whistleblowers by requiring all public corporations to allow employee concerns about accounting and auditing to be submitted confidentially and anonymously.
Sarbanes-Oxley Act
The countries represented by the acronym BRIC are important because:
They are emerging countries that will be among the wealthiest by 2030
_____________ are insiders who report illegal or unethical behavior
Whistleblowers
The ______ _______ organization was established to mediate trade disputes among nations, is headquartered in Geneva and is an independent entity of 159 member nations whose purpose is to oversee cross-boarder trade issues and global business practices.
World Trade
What was the organization that replaced the General Agreement on Tariffs and Trade (GATT) and was assigned the duty to mediate trade disputes among nations?
World Trade Organization (WTO)
A corporation is defined as:
a chartered legal entity with authority to act apart from its owners
A franchise owner will experience the coattail effect when:
a fellow franchise does something that has an impact on growth and profitability
_______advantage is a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item while_______advantage is the basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.
absolute, comparative
One company's purchase of the property and obligations of another company is a(n)
acquisition
An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors:
are not involved in daily operations
What are the two indicators nations rely on to measure global trade
balance of trade and balance of payments
Sometimes, due to a nation's unreliable currency, the only way to trade is ___________ which is defined as the exchange of merchandise for merchandise or service for service with no money traded.
bartering
Top officials in countries like Japan, South Korea, and China have faced legal charges of influence peddling and _____ charges, which serve as examples of the unethical behavior that U.S. companies face in overseas markets
bribery
In the 1970s the Foreign Corrupt Practices Act sent a chill throughout the U.S. business community by criminalizing the act of _______ business or government leaders to get business
bribing
The development of a(n) _______ market changes the way goods and services are traded within the market by establishing a similar external tariff, no internal tariff, and coordinated laws to facilitate exchange among memebers.
common
Corporate social initiatives are an enhanced form of corporate philanthropy dealing directly with a company's core _______
competencies
U.S. business will experience increased_______ in the future due to the effects of globalization
competition
The objective, "avoid criminal misconduct" describes which of type of ethical code?
compliance-based
The objective, "avoid criminal misconduct" describes which type of ethical code?
compliance-based
Written ethics codes can be categorized as:
compliance-based integrity-based
The joining of firms in completely unrelated industries is a(n)_______ merger
conglomerate
Socially______ companies are viewed more favorably by consumers
conscious
When a company wants to enter the global market without incurring heavy start-up costs, creating a successful brand and penetrating a new market with low risk, they are engaging in:
contract manufacturing
When farmers join together to get better prices for their food products, they form a farm_____
cooperative
The dimension of social responsibility known as ______ includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and proving a safe work environment.
corporate
The_______ form of business assists people in becoming owners without having to work at the firm
corporate
Patagonia's statement that they donate at least 1 percent of sales to reserve the steep decline in the overall health of out planet is an example of:
corporate policy
The statement by Patagonia that "a love of wild and beautiful places demands participation in the fight to save them, and to help reverse the steep decline in the overall environmental health of our planet" is an example of:
corporate policy
The dimension of social responsibility, which includes certain aspects such as seeking employees that are racially diverse or producing low-emission vehicles, is called:
corporate responsibility
As a legal entity, a_______ can enter into contracts without as much difficulty as a partnership.
corporation
Selling shares of stock to anyone allows a______ to raise more money to grow
corporation
Which form of business has double taxation and limited liability as its characteristics
corporation
a state-chartered legal entity with authority to act and have liability separate from its owner is a:
corporation
The most effective ethics officers are equally comfortable as_______ and investigators.
counselors
____________ is a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
countertrading
Which of the following countries are under U.S. embargo
cuba
Sharing risk means sharing rewards in a partnership. A partner expects to be rewarded for putting time and money into a firm through:
division of profits
Free trade can cause ________ workers to lose their jobs due to increased imports or production shifts to low-wage global markets.
domestic
The definition of _______ states; selling products in a foreign country at lower prices than those charged in the producing country
dumping
U.S. laws against_______ are specific. To keep domestic product prices competitive, U.S. law requires foreign firms to price their products to include 10 percent of overhead costs and 8 percent for profit.
dumping
Conflicts may occur between the stockholder-elected board of directors and the ____ about how the company is being run.
entrepreneurial managers
______________ are the activists who apply pressure by publicly naming companies that pollute the air and water
environmentalists
An____ ______ creates a situation where you must choose between two equally unsatisfactory alternatives
ethical dilemma
Facing a decision to either act unethically at the request of a supervisor or be fired for not acting as directed is referred to as an:
ethical dilemma
The selection of a(n)____ _____ is an important part of enforcing an ethics code.
ethics officer
In addition to goods and services, countries also _________ art, cultural events, medical advances, space exploration and labor
exchange
A major benefit of ______ is that selling goods and services to other countries results in an economic boost to the United States
exporting
All the manufactures make sure they are not misusing the "green label"
false
Social responsibility and ethical problems exist primarily in the U.S. because we have more laws about those problems?
false
A disadvantage of franchises is that most demand a ____ from the franchisee for the right to start the franchise
fee
Partnerships have the advantage over sole proprietorships of pooled knowledge and____ resources
financial
A product's carbon _______ is one possible, although sometimes controversial, measure of the products impact on the environment
footprint
The possibility of having all foreign assets expropriated is a disadvantage of ______ ______ ______
foreign direct investment
A business person concerned about startup costs of a business opportunity should consider a venture other than a(n) _____ which has this disadvantage
franchise
Businesses that are ______ like McDonald's have both a direct and indirect impact on the economy through job creating and spending.
franchises
Franchisees can begin to feel burdened if the _____ creates too many managerial orders, directives or limitations.
franchisor
If you are your own boss, you are responsible for paying your own wages/salary and your own____
fringe benefits
Mark, Cai and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n)______ partnership
general
Which of the following practices would be considered an ethical business choice that does more than the law requires?
giving part time employees paid holidays and sick days
The mortgage bankers and real estate companies who helped create the financial crisis of 2008 were driven by
greed
Although definitions and means of measuring a carbon footprint aren't yet clear, many companies ty to become more____ by claiming to reduce it
green
increasing public concern for the environment created by the ____ movement has more businesses looking for environmentally friendly ways to do business
green
Customers prefer to do business with companies they trust, proving the old saying that ______ is the best policy
honesty
A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n)
horizontal merger
A company's effectiveness and financial performance are most affected by responsible _____ _____ management.
human resource
The United States is the largest ______ nation in the world
importing
Unlike sole proprietorships and partnerships, corporations must file a tax return and pay any corporate _____ tax owed on profits
income
Ciba Specialty Chemicals' process that decreases production costs while reducing damage to the environment allows it to charge higher price on its patented dye product. This is an example of:
increasing profits by reducing environmental damage
The_____ cost of incorporating can be expensive because of the need for accountants and lawyers to get started.
initial
The SEC regulations on Fair Disclosure are designed to prevent ______
insider trading
The use of private company information by employee for personal financial gain is called _____ _____
insider trading
Which set of ethics codes defines an organization's guiding values, creates and environment that supports ethically sound behavior, and stresses shared accountability?
integrity-based ethics codes
Enforcement in a timely manner is the_____ and most critical step in the development of an ethics code program
last
The start-up costs of filing for incorporation are high because:
lawyers and accountants are needed to do the complex filings
Which strategy for reaching global markets provides for the lowest risk?
licensing
An S corporation has the liability protections of a corporation but is taxed:
like a partnership or sole proprietorship
A________ partnership has partners who do not share in operating the business
limited
If the sole proprietor dies, is incapacitated or retires, the business no longer exists. This disadvantage of a sole proprietorship is called _______ life span
limited
LLCs have_____ life span and are required to identify dissolution dates in the articles of organization
limited
Many sellers businesses elect to form a corporation because of the two main advantages of ______ liability and possible tax advantages
limited
Taryn and Eilysh have decided to form a partnership. Taryn will not have management responsibility, but will invest money in the business. Taryn will be considered a(n)_____ partner
limited
Bob and Dan are doctors in a medical practice. Dan is being sued for malpractice, but it will not affect Bob's assets because they formed a(n) _____ _____ partnership
limited liability
Don wanted to incorporate his business and liked the attributes of an S-corporation, however, he did not feel the eligibility requirements would work for his purposes. He is likely to choose the form a(n)
limited liability
Which is considered an advantage of incorporating?
limited liability
When there is one or more general partners and one or more limited partners, the firm is a(n)
limited partnership
The limited partner's' risk of losing their personal assets in an LLP is:
limited to the amount of their investment
The limited partners' risk of losing their personal assets in an LLP is:
limited to the amount of their investment
The result of two firms joining to form one is called:
merger
About 9 percent of franchises are owned by African Americans, Latinos, Asians, and Native Americans. Franchisors are becoming more focuses on recruiting _____ franchisees.
minority
___________ owned businesses are growing more than the national rate
minority
Many times free trade has a(n) ______ impact on U.S. domestic jobs, particularly manufacturing jobs.
negative
Benefits of being a member of a common market, or "trading bloc" include:
no internal tariffs
Since there is no stock, LLC ownership is _______ which means LLC members need the approval of the other members in order to sell their interests in the company.
nontransferable
Amy wants to start a business but is concerned with starting from scratch. To alleviate her concern Amy could
obtain a franchise
The emergence of the green movement has affected businesses by
offering consumers more product choices
The loss of jobs in the U.S. job market for unskilled, middle-income workers is a negative effect of _______ outsourcing
offshore
The shift of jobs from developed economies to low-wage global markets, called ______ outsourcing, has become a major issue
offshore
The definition of contract manufacturing states: a foreign country's production of private-label goods to which a domestic company then attaches its brand name or trademark; contract manufacturing is a part of the broad category of______
outsourcing
The outcome of FDI is a foreign subsidiary, a company located in a foreign country tat is owned by another company, called the ______ company.
parent
a disadvantage of buying a franchise is?
paying a share of profits as royalties
Foundations, universities and other nonprofit organizations own shares in publicly held companies, whose value is dependent directly upon____ of those companies
performance
When a corporation is separate from its owners and does not terminate with the death of one owner, the corporation has:
perpetual life
In a general partnership, no matter who creates the debt, all are liable for losses, lawsuits, or bankruptcy. All partners may lose their investment as well as:
personal assets
Partnership profits are taxed as ______ _____ of the owners
personal income
Corporate_______ includes charitable donations by corporations to nonprofit groups of all kinds
philanthropy
Even small companies participate in _______ through donations and volunteer support of local causes and national charities, such as the Red Cross and the United Way
philanthropy
A weak transportation infrastructure results in a(n)_____ barrier to global business.
physical
Corporate _____ is the dimension of social responsibility that refers to a position a firm takes or statement it makes on social and political issues.
policy
When the retail price of imported products is increased for the purpose of making domestic goods more competitively priced it is called a(n)
protective tariff
The Dodd-Frank Wall Street Reform and Consumer Protection Act:
provides a "bounty" for successful whistleblowers
Socially conscious research organizations exist to analyze and _____ on corporate social responsibility
report
The most popular businesses for franchising are ______
restaurants
Whistleblowers can be helped by protecting them from?
retaliation
The share of profits or sales revenue paid to the franchisor is called a(n)
royalty
One of the fastest growing franchise sector is_______
senior care
The _____ _____ is a systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs
social audit
A systematic evaluation of a company's progress toward implementing socially responsible program is known as a(n)
social audit.
Many companies believe they have a role in promoting ______ ______ that goes beyond simply "giving back"
social justice
When it comes to ethics, _____ sets the standards for moral behavior, that is behavior defined as right or wrong.
society
Studies have indicated that partnerships are four times more likely to succeed than:
sole proprietorships
investment funds controlled by the government holding large stakes in foreign companies are called:
sovereign wealth funds
When implementing an ethics code, it is important to share it with all ________ because pressure to act unethically often comes from the outside
stakeholders
A business person concerned about high______ costs should not invest in a franchise which is associated with this disadvantage
startup
The large _____ costs for the rights to a franchise can vary from a few thousand to millions of dollars.
startup
When choosing a(n)________ for reaching global markets, it is important to analyze the amount of commitment, risk, and profit potential
strategy
Many. U.S businesses demand socially responsible behavior from their international ____ to assure they do not violate U.S. human rights and environmental standards.
suppliers
Socially conscious investors insist that a company extend its own high standards to its______
suppliers
An advantage of partnership is a longer______ rate than sole proprietorships, because they become more disciplined and the business's life is based on all the partners.
survival
What is the primary function of protective tariffs?
to raise the price of imported products so that domestic goods are more competitively priced
Implementing ethical standards within an organization starts with:
top management
________ _________leads to less imported goods and services; its reasoning rest with the hope that domestic producers are given a better opportunity to survive and grow, which eventually leads to more local jobs.
trade protectionism
The person who buys the rights to use a business's name and sell its products, or services in a given territory in exchange for a free and royalties is a franchisee
true
The watchdog group that is most concerned with worker's rights and hunts down companies who violate them is:
union leaders
A key disadvantage of a general partnership is:
unlimited liability
When you own a sole proprietorship you and the business are considered one, so you have ______ liability for financial obligations such as debt.
unlimited.
When two firms operating in different stages of related businesses join, it is called a(n) ______merger
vertical
