Exam 2

_____ are organizations that pool contributions from investors, clients, or depositors and use these funds to buy stocks and other securities.

Institutional investors

According to the us SBA To officially count as a small business

Number of employees range from fewer than 100-1500

Which of the following statements is true of sole proprietorships?

Owner receives the entire share of the firms' profits.

Which of the following examples of business conduct is legal but unethical?

Paying nonliving wages to workers in developing countries

In the context of ethical choices, which of the following is a strong predictor of ethical leadership?

Personal empathy

_____ is the strategy of deliberately designing products to fail in order to shorten the time between purchases.

Planned obsolescence

Which of the following steps should an organization follow to bring its code of ethics to life?

Protection should be established for people who report illegal or unethical behavior.

In the context of corporate restructuring, which of the following is a common objective of a vertical merger?

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

In the context of corporate restructuring, which of the following is a common objective of a conglomerate merger?

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

Which of the following is a drawback of franchising?

Restrictions on sale

In the context of carbon footprint, employee commutes, supplier emissions, and product-use emissions are categorized under _____.

Scope 3 emmisions

Shayla is performing a social audit of her company. She needs to evaluate how well the firm is meeting its ethics and social responsibility objectives. To do this, she first establishes the goals that the company should strive to meet. Which of the following is most likely to be the subsequent step performed by Shayla?

She would determine how to measure the achievement of the established goals.

In the context of formation, which of the following is a similarity between limited liability companies (LLCs) and corporations?

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

_____ is the obligation of a business to contribute to society.

Social responsibility

_____ is a federal legislation passed in 2002 that sets higher ethical standards for public corporations and accounting firms.

The Sarbanes-Oxley Act

_____are companies that invest in start up businesses with high growth potential in exchange for the share of ownership

Venture capital firms

In the context of business ethics, which of the following situations best describes an ethical dilemma?

When a person is forced to choose among bad options

_____ are employees who report their employer's illegal or unethical behavior to either the authorities or the media.

Whistle-blowers

In the context of socially responsible companies, codes of conduct work best with _____.

a commitment to finding solutions that work for all parties involved

Which of the following statements is a similarity between general partnerships and sole proprietorships?

Both allow owners to avoid double taxation.

Which of the following is a similarity between ethics and social responsibility?

Both play a vital role in building profitable businesses and a vibrant community.

_____ refers to the amount of harmful greenhouse gases that a firm emits throughout its operations, both directly and indirectly.

Carbon footprint

_____ refers to marketing partnerships between businesses and nonprofit organizations, designed to spike sales for the company and raise money for the nonprofit.

Cause-related marketing

Which of the following is a disadvantage of a limited liability company (LLC)?

Complexity of formation

According to the universal ethical standards identified by the nonprofit, nonpartisan Character Counts organization, which of the following illustrates the core value of citizenship?

Contributing to the community and protecting the environment

_____ refers to business contributions to the community through the actions of the business itself rather than donations of money and time.

Corporate responsibility

Which of the following is an appealing benefit that entrepreneurs enjoy?

Flexible schedule

_____ refers to developing and promoting environmentally sound products and practices to gain a competitive edge.

Green marketing

Entrepreneurs who mortgage their homes for the business and stake their reputation on the success of an unproven product demonstrates

High tolerance of uncertainty

In the context of corporations, _____ is a corporate restructuring in which one firm buys another.

an acquisition

In the context of social responsibility, stakeholders refer to:

any groups that have a personal interest in the performance and actions of an organization.

Unlike corporations, limited liability companies (LLCs):

are subject to less paperwork.

In the context of business ownership, the document filed with a state government to establish the existence of a new corporation is referred to as the _____.

articles of incorporation

In accordance with corporate bylaws, stockholders elect a _____ and rely on it to oversee the operation of their company and protect their interests.

board of directors

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 _____.

business format franchise

An advantage of a general partnership is that the:

business is taxed as the personal income of its owners.

In the context of corporations, the _____ and other corporate officers manage the company on a daily basis.

chief executive officer

A _____ is a formal, written document that defines the moral standards of an organization and gives employees the information they need to make moral decisions across a range of situations.

code of ethics

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

corporation

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 _____.

corporation

A _____occurs when a firm transfers total or partial ownership of some of its operations to investors or to another company.

divestiture

In the context of carbon footprint, Scope 2 refers to:

emissions that result from purchased electricity, heat, and steam.

People who risk their own money to organize and run businesses are known as

entrepreneurs

The board of directors of a tile manufacturing company meet to discuss the installment of a new high-end machinery. They all agree that installing the machinery in the workplace could result in a lot of employees being laid off because of the reduced need for manual labor. At the same time, canceling the order placed for the machinery could cause legal issues as the company has already signed a contract with its suppliers. The board of directors thus weigh both the options to see which would cause them less inconvenience. In this scenario, the board of directors face a(n) _____.

ethical dilemma

An individual who decides to establish a sole proprietorship must realize that he or she would be:

facing unlimited personal liability for the company's debts.

According to the universal ethical standards identified by the nonprofit, nonpartisan Character Counts organization, providing equal opportunity represents the core value of _____.

fairness

Socially responsible firms support consumer choice by:

following the laws that prevent anticompetitive behavior such as monopolies.

A _____ is a licensing arrangement under which one party allows another party to use its name, trademark, patents, copyrights, business methods, and other property in exchange for monetary payments and other considerations.

franchise

In the context of the various forms of operating a business, instant brand-name recognition is a benefit ensured by a:

franchise

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 _____.

general partnership

In the context of corporate restructuring, a _____ is defined as a combination of firms in the same industry.

horizontal merger

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 _____.

hostile takeover

A key advantage of a C corporation is:

its ability to raise large amounts of financial capital.

Oponium, a laptop manufacturer, offers a variety of gaming laptops at discounted prices. However, the laptops have been designed in such a way that they have performance issues after being used for six months, thereby generating revenue for the company through service charges. In this scenario, Oponium's business conduct is:

legal but unethical.

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 _____.

limited liability company

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 _____.

limited partnership

One of the drawbacks of sole proprietorship is that the owners:

may find it difficult to attract and maintain talented employees.

The starting point for socially responsible employers is to:

meet legal standards.

A _____ refers to a corporate restructuring that occurs when two formerly independent business entities combine to form a new organization.

merger

In the context of franchising, a Franchise Disclosure Document (FDD):

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

The _____ is a situation where the behavior of an incompetent or an irresponsible franchisee adversely affects not only the franchise as a whole but also the success of other franchisees.

negative halo effect

In the context of ethical individuals, _____ refers to identification with and understanding of another's situation, feelings, and motives.

personal empathy

Aquin, a cell phone manufacturer, has released a new model of smartphones. The smartphones have been designed in such a way that they offer excellent performance in the first few months, but develop technical issues after a certain period. Thus, the customers are bound to repurchase a new phone within a short period. In this scenario, Aquin's strategy is an example of _____.

planned obsolescence

According to the universal ethical standards identified by the nonprofit, nonpartisan Character Counts organization, treating others how you'd like to be treated, being considerate, and being tolerant of differences represent the core value of _____.

respect

According to the universal ethical standards identified by the nonprofit, nonpartisan Character Counts organization, being self-controlled and self-disciplined and being accountable for your choices represent the core value of _____.

responsibility

Ethics refer to:

sets of beliefs about right and wrong

A(n) _____ is a systematic evaluation of how well a firm is meeting its ethics and social responsibility goals.

social audit

Deborah is an executive at Aviroend Inc. Her boss has assigned her the task of reviewing the firm's ethics and social responsibility objectives. To prepare a report, she gathers data from various sources, internal as well as external, and uses software tools to create graphs and charts that capture how socially responsible Aviroend has been since the establishment of its ethics and social responsibility goals. In this scenario, Deborah is performing a(n) _____ of Aviroend.

social audit

Companies that step in with on-site day care programs for workers facing challenges such as raising kids are fulfilling their:

social responsibility.

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:

sole proprietorship.

In the context of responsibility to the environment, _____ refers to doing business to meet the needs of the current generation without harming the ability of future generations to meet their needs.

sustainable development

Universal ethical standards are ethical norms:

that apply to all people across a broad spectrum of situations.

In the context of code of ethics, the best-known code is the Johnson & Johnson Credo, which has guided the company profitably through a number of crises. One of the striking elements of the credo is:

that it commits to a fair return for stockholders.

In the context of corporate restructuring, a _____ refers to a combination of firms that are at different stages in the production of a good or service.

vertical merger

Gladys, a doctor at Talthron Hospital, notices that one of the trustees of the hospital is falsifying the data of Medicare patients when submitting reports to the government. She reports this misconduct to the media. In this scenario, Gladys can be considered a _____.

whistle-blower

In the context of small businesses and the economy of a country which of the following factors can bring down entrepreneurship rates

A high level of employment protection

Which is a threat to a small business

A bigger regulatory burden compared to a large business

niche market

A smaller part of a larger market in which customers have more specific needs and wants

In the context of monitoring ethics and social responsibility in organizations, which of the following statements is true of a social audit?

Determining how to measure the achievement of established goals is the second step in the process of conducting a social audit.

Which of the following is an advantage of sole proprietorships?

Ease of formation

From the franchisee's perspective, which of the following is an advantage offered by franchising?

Easy access to funding

To bring a code of ethics to life, experts advocate a forceful, integrated approach to ethics. In this context, which of the following steps is essential?

Integrating ethics into mandatory staff training

The _____ considers a C corporation to be a separate legal entity and taxes its earnings accordingly.

Internal Revenue Service

Which of the following statements is true of corporate responsibility?

It focuses on contributions made to the community through the efforts of a business.

In the contexts of various launching options when starting a new business which of the following statements is a drawback associated with buying a franchise

It has less opportunity for creativity

In the context of responsibility to the community, which of the following statements is true of corporate philanthropy?

It includes all business donations to nonprofit groups.

Which of the following statements best describes a C corporation?

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

Which is a drawback of buying an established business

It may entail inheriting the previous owners mistakes

Which of the following statements is true of the Sarbanes-Oxley Act?

It requires that financial officers personally certify the validity of their financial statements.

Funding options for a small business, which of the following statements is true of crowdfunding

It sites are used to fund nonprofits

Which of the following is one of the largest crowdfunding sites in terms of traffic?

Kickstarter.com

Entrepreneurs must understand that no conventional lender, whether private or public, will:

Loan all of the startup's funding

_____are small segments of market with fewer competitors than the market as a whole

Market niches

Which of the following is a disadvantage of sole proprietorship?

The company legally ceases to exist if the owner withdraws.

Which is an advantage of starting a business from scratch

The entrepreneur gets to build his or her own business concept and structure

Which of the following statements is true of franchises set up across borders?

The limit of a franchisee's right over a territory is decided through a franchise agreement.

When starting a business from scratch

The logistics can be challenging

Which of the following consumer rights is referred to when businesses are legally responsible for injuries and damages caused by their products, even if they have no reason to suspect that their products might cause harm?

The right to be safe

Which of the following statements is true of limited liability companies (LLCs)?

There is no separate tax on the earnings of the companies if they choose to be treated as a partnership.

Which of the following statements is true of people with an external locus of control

They believe that the actions of others can control their fate

Which of the following is true of a small business

They have more scope to provide personal customer service than large businesses

In the context of a limited partnership, which of the following statements is true of general partners?

They have the right to participate fully in managing their partnership

In the context of C corporations, which of the following is a difference between preferred stockholders and common stockholders?

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

Which of the following is a disadvantage of general partnerships?

Unlimited liability

The vast majority of limited liability companies (LLCs) elect to be taxed as:

partnerships

external locus of control

the perception that chance or outside forces beyond your personal control determine your fate.

Socially responsible companies make it easy for consumers to express legitimate complaints and develop highly trained customer service people to respond to the complaints. This ensures customers _____.

the right to be heard

According to _____, customers can freely purchase the products that meet their needs.

the right to choose