Senior Business Class Flash Cards

A store purchased a shipment of goods for $12 each. A profit of $7 per item is desired, and the operating cost is $3 per item. Markup for each item should be

$10. Markup should cover operating expenses and profit. In this problem, operating expenses of $3 would be added to profits ($7) to determine a markup of $10.

Which of the following is an appropriate selling price for a product with total costs of $10.00 and a gross margin of $5.00:

$15.00. The selling price of a product should cover the costs of the product as well as providing a profit for the seller. To calculate selling price, add the total costs of the product to the desired gross margin. In this problem, selling price = $10.00 + $5.00 = $15.00.

If a business which normally has gross sales of $15,800 per week forecasts an increase in sales of 8%, forecasted weekly sales would be

$17,064. Many businesses forecast sales based on sales trends. A business whose sales had been increasing at a rate of 8% might use that percent of increase to forecast future sales. In this case, to calculate the new sales figure, multiply the gross sales by the percentage of increase ($15,800 x 8% or .08 = $1,264) and add the product to gross sales ($15,800 + $1,264 = $17,064).

If sales were $323,000 during a certain period last year, and a 15% increase is expected for the same period this year, what are the expected sales for this year?

$371,450.00. Since sales are expected to increase a total of 15% over the previous year's figure of $323,000, sales for the current year can be determined by computing 115% of $323,000. It is also possible to arrive at the correct answer by computing 15% of $323,000 ($48,450) and adding the two numbers ($323,000 + $48,450 = $371,450).

In a shipment of merchandise purchased for resale, each item costs $30. A profit of $15 on each item is desired. Operating expenses for each item are $5. What should be the minimum selling price of each item?

$50. A product's selling price should cover the item's cost, its expenses, and an amount of profit for the business. To obtain the selling price in this situation, add the purchase price, operating expenses, and desired profit ($30 + $5 + $15 = $50).

A company wants consumers to try out its newest product. What type of promotion would be most effective for the company to use?

A company wants consumers to try out its newest product. What type of promotion would be most effective for the company to use?

Which of the following best describes a business plan:

A company's business model in written form. A business plan is your company's business model in written form. This important document is like a map and a compass. It is your company's blueprint for success. Every business is unique, and so is every business plan. A business plan is more than just a description of your business or a summary of your finances.

Which of the following is an example of an activity associated with the directing function of management:

A manager disciplines an employee for inappropriate behavior in the workplace. Directing is the management function of providing guidance to workers and work projects. An important part of guiding workers involves disciplining them when necessary. Sometimes, when employees are not doing what they need to be doing, managers need to discipline them. This might involve telling them that certain behaviors are inappropriate. Interviewing job applicants is a staffing activity. Coordinating tasks is an organizing activity. Recommending changes is a controlling activity.

What do businesses use to keep track of daily financial transactions?

Accounting records. Financial transactions, such as buying supplies and paying bills, affect the financial condition of the business. Some types of businesses, such as retailers and large corporations, have transactions every day. They buy and sell and need to keep track of those transactions. Using accounting records helps a business track how much it spends and earns. There are many different types of accounting records that track sales, other sources of income, purchases, expenses, cash flow, etc. The goal is to track transactions to make sure the business has sufficient funds and is financially sound. Balance sheets, inventory reports, and bank statements are types of financial records; however, they are not used to keep track of daily financial transactions.

Businesses with a profit orientation establish selling prices that they feel will

Achieve a target return on investment. Profit-oriented pricing objectives are focused on creating profits for the business. Some businesses base the amount of profit they want to earn on the amount of their capital investment. Increasing market share, creating an image, and increasing sales are goals of sales-oriented pricing.

In some countries, it is illegal for an interviewer to ask questions about a job applicant's

Age and health issues. The interviewing process provides a business with an opportunity to meet and interact with an applicant to learn more in-depth information about his/her qualifications to perform a job. During the interview process, the interviewer should ask questions that focus on the applicant's work-related skills, education, and training. Because it is against the law to ask certain types of personal questions, the interviewer should avoid asking questions that relate to the applicant's age and health.

One of the benefits to the business of an effective employee selection procedure is a(n)

Appropriate match of employees to jobs. An effective employee selection procedure screens applicants carefully and selects those who are best qualified to do the job. This benefits the business because the new hires need little or no training and are soon able to achieve good levels of productivity. Effective selection does not reduce the need to orient employees to their new place of employment. A rapid rate of turnover and having a number of employees who need training would not benefit the business.

Workers who feel they are treated fairly by the businesses for which they work usually

Are very productive. Employees' perceptions of the way in which they are valued by their employers affect their morale, their loyalty to the business, and thus their productivity. These workers are loyal to the business and stay with it, have high morale, and have no need to file discrimination lawsuits. Their high productivity enables the business to be more competitive and to increase its profits.

When a business conducts a market analysis and identifies territories, determines the possible buyers in the territories, and estimates the buyers' purchases, it is evaluating the

Area's market potential. A market analysis is a study of a particular market segment. The purpose of the market analysis is to determine the level at which the market segment is willing and able to buy the business's products. One aspect of the market analysis addresses the area market potential, which is the number of potential customers and the potential sales volume for a specific area, territory, or location. Psychographics are lifestyle and personality considerations of a market segment. Competitors are the business's rivals. Media exposure refers to the amount of contact the business makes with the target market through the media (e.g., television, radio). Psychographics, competitors, and media exposure are other important considerations when evaluating the overall market potential of a market segment.

In management, a primary organizing activity is

Assigning responsibility. Organizing is the management function of setting up the way the business's work will be done. Assigning responsibility (establishing levels of authority) is an organizing activity. Hiring talented workers is a staffing activity. Evaluating job performance is a controlling activity. Management can monitor and adapt to external conditions but cannot control them.

What approach to sales forecasting is described in the following situation: A toy manufacturer is preparing a sales forecast by asking for separate forecasts for specific lines of toys, for specific territories, and for specific sales representatives. This information will then be combined into a forecast for the entire company.

Bottom-up. The bottom-up sales forecasting approach is prepared by starting with separate forecasts for specific lines which may then be combined into a forecast for the entire company. The top-down sales forecasting approach is prepared for the company as a whole and then broken down into forecasts for specific products, salespersons, territories, product lines, departments, or for any other area for which the business needs to forecast sales. Breakdown is another name for the top-down approach. Jury of executive opinion is a qualitative sales forecasting method which gathers opinions from company executives.

The main advantage of external recruiting of employees over internal recruiting is that it

Brings in more applicants. External recruiting seeks new employees outside the business. This creates a larger pool of candidates from which the business can choose than internal recruiting. It may also be the only way to attract applicants with the required skills and knowledge. The other alternatives are advantages of filling positions from within the organization.

So that a business can identify and correct problems, it is important to track the performance of its

Business plan. A business plan is the written business model that describes how a business will operate and achieve its objectives. The business plan outlines the strategies that the business will use to achieve its goals. To determine if the business is achieving its goals, it must track its actual performance in relation to the goals detailed in the business plan. If the business determines that it is not achieving certain goals, it can take steps to improve its performance. A corporate charter is a legal document that permits a business to operate as a corporation. An annual report summarizes the business's financial status. Tax returns are documents sent to the appropriate government taxation agency.

Training and human resource development have many benefits, most of which relate directly to an increase in

Business profits. Such benefits as increased production and quality of work, improved employee morale, decreased employee turnover, reduced need for supervision, and reduced labor costs, result in higher business profits. Training and development increase production, rather than lengthen the working hours of the business. Training and development reduce, rather than increase, labor costs and the need for supervision.

One reason why it is important for companies to provide continual training is to keep their employees informed about current

Business trends. Continual training and development are as important as initial training. Since employees tend to forget technical information and may have difficulty staying current with new trends, retaining and updating of training are vitally important. Companies usually do not provide training about current economic conditions or vendor relations. Information about job requirements is provided during initial training.

Which of the following is a primary factor that affects a company's choice of promotional mix elements:

Characteristics of the company's product. The specific characteristics of the company's product will determine which type(s) of promotion will be most effective. Other primary factors that affect the choice of promotional elements include the product's market, the firm's distribution system, and the characteristics of the company. The number of company employees, the location of the company, and the media used by other firms in the same industry might be secondary factors affecting the promotional mix.

When processing customer payments, businesses compare the payment notice with the

Check amount. When processing customer payments, it is important to compare the payment notice with the check amount to make sure the customer has paid the correct amount. The payment notice indicates the amount that the customer is required to pay. By comparing this amount with the check amount, a business can give a customer credit for paying the correct amount. If there is a discrepancy, the business can contact the customer to determine the cause. In some cases, customers miscalculate sales discounts and accidentally pay the wrong amount. The discount terms, account number, and possibly the interest rate appears on the payment notice.

To verify information about applicants, employers can

Check references. The checking of references is a common method of gathering and of verifying information about applicants. Types of reference checks that are often used are previous employment, credit, education, and personal references. The information provided by applicants in résumés and in application blanks is verified through the use of reference checks. Physical examinations are used to identify applicants' pre-existing health problems.

The receiving department of a small business employs two stock clerks who each work six-hour shifts. What is the most effective work schedule if the store receives deliveries between the hours of 7-8 a.m., 9-11 a.m., and 1-3 p.m.?

Clerk 1: 6 a.m. to noon; Clerk 2: 9 a.m. to 3 p.m. This schedule provides an opportunity to prepare the area for the first delivery and also has two clerks available for the last two, longer, delivery times. The other alternatives are not as effective because they don't provide the most coverage when deliveries are scheduled.

Businesses often verify the information provided on job applications and résumés by

Conducting background checks. Before selecting candidates to interview, businesses screen job applications and résumés to identify those who have the appropriate backgrounds. After identifying the best candidates, businesses often conduct background checks to verify the information that was provided. This might include calling the references and former employers who were listed on the applications/résumés. The purpose is to make sure that the information is accurate and that applicants are not misrepresenting themselves. Businesses cannot verify the information by questioning the applicants who provided the information. It would be difficult for businesses to identify and interview former coworkers unless these individuals were listed as references. Businesses do not hire private investigators to verify job application information.

What is the demand for our products in this region? This is a question that a business wants to answer when it

Conducts a market analysis. A market analysis is a systematic study of the market. It is important for a business to know how many members of the market want or need the business's product before it spends the money to market the product in that area. If there is little or no demand for the product in a specific geographical area or region, then it is not practical to spend money to offer and promote the product. A business does not use a market analysis to evaluate the business's technology needs or to develop financial standards. The purpose of an orientation program is to introduce new employees to their coworkers and orient them to their new work environment.

Before a business owner decides to hire a new employee, s/he must first

Consider the demand for the business's product. Business owners often hire additional employees when they expect demand to increase for their products. When a company expects higher sales, it needs to increase its outputs and, therefore, needs more inputs (e.g., personnel) to satisfy the higher product demand. Business owners do not need to obtain government application forms to hire employees. The business owner may not ask current employees to increase their workloads because they may not have the necessary skills to perform the job. Once the business owner determines that there is a need to hire an employee, s/he can advertise the position in the newspaper for outside candidates.

Which of the following is economic information that will help in preparing a sales forecast for a business

Consumer spending levels. The level of current consumer spending, as well as forecasts of future levels, is important economic information useful in preparing a firm's sales forecast. Operational changes such as staff adjustments are those made within the business. Product revisions involve marketing information, not economic information.

Aaron, a small-business owner, develops an exit strategy so that his company keeps growing and prospering in the marketplace after he leaves. The exit strategy is one aspect of Aaron's

Continuation plan. An exit strategy is the blueprint that an entrepreneur uses to leave the company. There are many options for the business owner to consider when leaving the company, such as selling the business, executing an IPO, or taking his/her share of the profit. Each option requires a different course of action. Regardless of the option the owner selects, the business owner should try to make the transition as smooth as possible so that business operations are not interrupted. The exit strategy is one aspect of the continuation planning, which is the function of deciding what activities will need to be performed to keep a company prospering, and the steps it will need to take to accomplish these activities when the business owner leaves the company. The exit strategy is not one aspect of Aaron's control system, management style, or competitive advantage.

Quarterly, each of the international vice presidents of Smith & Webber completes the company's scorecard and submits it to the president of the company. The scorecard tracks sales, profit, advertising expenses, and other key information. The scorecard is a tool for which of the following management functions:

Control. Control is establishing performance standards based on the company's objectives and then evaluating and reporting the actual job performance. The scorecard allows top management to evaluate job performance in each country. Planning requires administration to assess where the company is currently and where it should be in the future. From there an appropriate course of action is determined and implemented to attain the company's goals and objectives. While the scorecard may be evaluated prior to planning, it is not a plan for moving forward. It is a picture of the current quarter. In the directing function, management assists staff in meeting company as well as personal career goals. Organizing involves creating an organizational chart, establishing and maintaining relationships, and assigning required resources.

What is the management activity that involves comparing what was planned with what actually happened?

Control. Control is the management function that involves comparing what was planned with the actual results. Organize is the management function that determines what work needs to be done and who is to do each job. Plan is the management function that includes gathering information, making decisions, and setting goals. Direct is the management function responsible for seeing that workers perform their tasks correctly and on time.

Which of the following is a major disadvantage to a business of recruiting job applicants through outside agencies:

Cost of agency services. Many businesses use all other means of recruitment before turning to an agency because the fees charged are usually high. However, the agency can also save a firm both time and money because it interviews job applicants, screens them so that only the best qualified need to be interviewed by the business, and helps the business to meet legal guidelines for hiring by keeping up-to-date on equal opportunity and affirmative action laws.

Which of the following policies would best allow a ski resort to meet a temporary increase in demand for service without sacrificing productivity or increasing costs:

Cross-training employees to perform several different jobs. Cross-training allows management to reassign people working on less essential tasks to assist temporarily at high points of demand. Hiring new employees has high recruitment and training costs, plus it can result in overstaffing when demand returns to normal. Increasing work hours means paying overtime and can also adversely affect employees' productivity. Customers don't like irritable and overworked service providers. Using temporaries isn't as costly as hiring new employees, but they would lack the training of regular employees; therefore, they would not provide the same level of service.

Although training costs money, businesses may find a lack of training even more expensive because of the loss of

Customers. Customers may be so frustrated or offended by having to deal with a business's untrained employees that they may take their business elsewhere. Unhappy customers may also share their opinions with others and damage the company's goodwill. Untrained employees are not likely to cause a business to lose its competitors or its suppliers/vendors.

The advantage to a business that uses opt-in e-mail to promote its products is that the business can

Customize offers. Direct marketing is an effort to obtain business by sending promotional information to customers directly to their businesses or homes. Opt-in e-mail, which allows a business to send promotional messages with the receiver's permission, gives the business an opportunity to send promotional messages and coupons to the customers who are most likely to purchase the product. By having customers complete a customer profile, the business can customize the promotional offers so that customers receive promotional information about the products that are of the most interest to them. Demographics are the physical and social characteristics of the population. A business can use demographic information to develop messages to appeal to a target market; however, it cannot influence the actual physical and social characteristics of that market. A trend is the general direction in which society is moving. Businesses do not send promotional information to predict trends. A business can take action to try to increase sales, but it cannot control sales.

In which way can a start-up business benefit from writing a business plan?

Define managers' roles. A business plan can help a start-up company whose managers do not have clearly identified roles to establish who is expected to do what. When business owners want to sell an existing business, they write a business plan to help them set a value. An existing business can use a business plan to prepare for an expansion, such as an additional product line, office building, or group of employees. Writing a business plan forces an existing company to analyze the effectiveness of a new product or promotion.

Businesses often segment their target markets into which of the following three primary areas:

Demographic, psychographic, geographic. These are the three main ways to segment a target market. Demographic segmentation is the division of a market on the basis of its physical and social characteristics. Psychographic segmentation is the division of a market on the basis of consumers' lifestyles and personalities. Geographic segmentation is the division of a market on the basis of where consumers are located. Productive, rational, sociological, promotional, economic, and technological are not ways of segmenting target markets.

Age, ethnicity, and income are all factors when developing a target segment based on

Demographics. Age, ethnicity, and income are all factors of the science of demographics, which studies the various aspects of a group's background to determine similarities in decision making of individuals within groups. Sometimes, geographical areas are used to segment populations. This type of targeting can emphasize attachment to a particular geographic location as the defining feature of a group. Behavioral segmentation sorts consumers based on their attitudes towards or use of a product or service. Psychographics is used to segment markets on the basis of beliefs, values, attitudes, lifestyles, etc.

Company XYZ has developed a new flavor of ice cream called Hunky Chunky and has selected a target market that consists of boys, ages 7-15, who are living at home with their parents in a household that earns between $30,000 and $60,000 a year. This method of target market selection is based on

Demographics. Demographic segmentation is the division of a market on the basis of its physical and social characteristics. Psychographic segmentation is the division of a market on the basis of consumers' lifestyles and personalities. Geographic segmentation is the division of a market on the basis of where consumers are located. Socioeconomics is not a method of selecting a target market.

Before a business takes steps to hire a new employee, it should

Determine that a new employee is actually needed. The business should make sure that the business really needs another employee before beginning the hiring process. New employees are often needed when the business has expanded, its market has grown, or current employees are leaving or retiring. Once the need for an additional employee has been established, the business can identify the available sources of new employees and plan the employee's schedule and training.

If Alisa meets her objectives, she plans to sell her company in five years. To facilitate a smooth transition for her company so it continues to grow, Alisa should

Develop an exit strategy. Continuation planning is the function of deciding what activities will need to be performed to keep a company prospering, and the steps it will need to take to accomplish these activities when the business owner leaves the company. Most often, this involves ongoing planning. By developing a comprehensive exit strategy, the business owner decides how the company will continue running after s/he has left. When the owner leaves the company, s/he might sell the business, execute an IPO, or take his/her share of the profit. So the business keeps running smoothly, the business owner develops an exit strategy for a smooth transition. Researching other venture opportunities, selecting a close friend to take over the business, and asking employees for input are steps that the owner may take when developing an exit strategy, which is a part of continuation planning.

The scope of control that staff members have over their jobs affects the amount of time that a manager spends

Directing their work activities. Directing is the management function of providing guidance to workers and work projects. When managers are directing the staff members' work, they are monitoring and evaluating the work to determine if it is being done correctly. This often involves observing the employees and providing feedback. The scope of control that an employee has over his/her work affects how much a manager directs the employee's work. If an employee has a great deal of control over his/her work, has authority to make decisions about how his/her work is accomplished, and works independently in a responsible manner, then the manager does not need to spend a lot of time directing the employee's work activities. Planning is the management function of deciding what will be done and how it will be accomplished. Identifying ways to achieve goals is an element of the planning function. Negotiating employee contracts is an activity associated with the staffing function of management.

What management function involves motivating and encouraging an employee?

Directing. Directing is the management function of providing guidance to workers and work projects. Directing activities include motivating, leading, and disciplining workers. When a manager encourages an employee to do something, the manager is performing a directing activity. Organizing is the management function of setting up the way the business's work will be done. Recruiting is a staffing activity. Staffing is the management function of finding workers for the business.

Establishing clearly formulated, overall organizational objectives provides a business with

Direction for the business's activities. Setting overall company objectives provides direction and guidance for management based on the mission of the organization. Strategies are the plans of action for attaining company goals. Tactics are the specific actions that will be used to carry out strategies. Potential risks may be identified when objectives are formulated, but that is not the purpose of setting objectives.

Which of the following is an important question that a business should ask when selecting a vendor:

Does the vendor have the resources to consistently meet our business's needs? A business that wants to build a long-term relationship with a vendor must consider many factors. Most importantly, the business must determine if the vendor has the resources to meet the business's needs. Some resources include the product availability, technical-system compatibility, customer-service support, etc. The vendor's project management computer program is not usually a primary consideration during the vendor-selection process. The business's own target market is a marketing consideration for the business rather than for vendor selection. The business's strengths and weaknesses are identified in its SWOT analysis, and do not directly relate to the vendor-selection process.

Which of the following is a possible external threat that a business might identify as a result of conducting a situational analysis during the marketing-planning process:

Downturn in the economy. A situational analysis involves examining and interpreting the environmental factors that affect a business. As a result of considering external environmental factors, a business often is able to identify potential threats in the marketplace such as increasing competition or a downturn in the economy. Once a business identifies the specific threats, it takes steps to turn them into opportunities. For example, if the economy is beginning to slow down, a business might revise its products or offer additional credit plans to appeal to a wider market. A change in pricing structure, a contract with a new supplier, and a decrease in operating expense are internal factors.

Why should a manager seek employee input when considering solutions to an employee complaint?

Employees may already have a solution to the problem. Managers should try to obtain employee input when resolving a complaint because the employees may already have a solution to the problem, and they tend to support what they help to create. Managers must keep in mind that employees may not be objective about a situation in which they are involved and have their own best interests at heart. Since many factors are usually involved in a problem, the employees may know the results, or effects, of the problem without knowing its true cause. Asking for employee input in resolving a problem is not always the easiest way to handle it and may create additional problems, rather than quickly resolving the initial problem.

What are businesses examining when they conduct a situational analysis during the marketing-planning process?

Environmental factors. The purpose of a situational analysis is to examine and interpret the environmental factors that affect the business. The environmental factors may be internal, such as a business's distribution system or pricing strategy, as well as external, such as the state of the economy or the number of competitors. Businesses examine both types of environmental factors in order to adapt to change and make effective marketing decisions. For example, if the economy is slowing down, a business might decide to adjust its prices to remain competitive. Physical characteristics are personal traits such as age, height, weight, etc. Personal aptitudes are a person's natural talents. Geographical changes involves changes in natural features or climate.

Which of the following do businesses use to identify developing changes so that they can make adjustments to remain competitive:

Environmental scanning. Businesses need to understand changes in their environment in order to adapt and remain competitive. They often use a procedure known as environmental scanning to gather information about changes or trends that are beginning to develop in the marketplace. This procedure allows businesses to identify changes at an early stage and decide if they present a threat to the way the business is currently operating. Businesses do not use geographic monitoring, demographic segmenting, or psychological profiling to identify changes that are developing.

One of the main purposes of a business plan is to help a new business

Establish objectives. A new business develops a business plan to establish its objectives, outline the steps it must take to achieve the objectives, and estimate its financial needs. Objectives are the goals that a business wants to achieve. For example, a new business might establish an objective of becoming the main provider of a specific product to area residents. Once the business establishes its goals, it can develop strategies to achieve them. Policies are general rules to be followed by company personnel. A procedure is the step-by-step process personnel follow in performing a specific task. Standards are used as a basis for comparing or judging goods or services.

One of the functions of managerial control involves comparing the results of various business activities with the

Established goals. Controlling is the management function that monitors the work effort. One of the main functions of managerial control is to make sure that the business's goals and objectives are achieved. To be successful, businesses must be able to achieve what they plan. By monitoring the actual results of various business activities, managers will know if the business is performing as planned and achieving its goals, or if changes need to be made. Hiring and purchasing are types of business activities. Safety regulations are established by governments.

One of the main reasons why owners develop a business plan before starting a new business is to

Estimate financial needs. Before starting a new business, owners develop a business plan in order to establish objectives, outline the steps to take to achieve the objectives, and estimate financial needs. Estimating financial needs is extremely important because the owners need to know how much money it will take to operate the new business until it begins to generate a profit. If the owners do not have sufficient funds or cannot obtain those funds, it may not be feasible to start the business. Owners do not develop a business plan to organize production processes, identify qualified workers, or prepare operating manuals.

What do businesses need to develop to effectively assess employee performance?

Evaluation criteria. Before assessing employee performance, businesses need to develop evaluation criteria which are the standards or behaviors that will be assessed. Businesses often develop specific criteria such as attendance, attitude, productivity, etc. For example, customer service is important; therefore, an important criterion might be an employee's ability to be friendly and helpful while providing service to customers. Criteria provide the basis for assessing employee performance. Job descriptions are developed before hiring employees to fill certain positions. After an employee's performance has been assessed, a business provides appropriate feedback. Employees who receive good or excellent assessments often are recognized for their performance.

The part of the business plan that gives an overview of the entire document is the

Executive summary. The executive summary is the most important part of the business plan because it gives an overview of the entire document. At the end of the document are the appendices—the extra bits of information that describe or lend support to a point made in the document. The table of contents lists all of the business plan's sections with corresponding page numbers, so that information is easily accessible. The company description accurately portrays the new company or venture, provides a history of the company, and shows the current business structure, among other things.

When screening applicants' résumés, businesses often use evaluation forms to qualify a person's training and

Experience. Human resources departments often develop training and experience (T and E) evaluation forms to qualify job applicants. The evaluation forms list specific information about special skills, training, experience or knowledge that are needed to perform the job. The evaluation forms help human resources personnel to check the applicants' résumés to make sure that they meet the criteria required to perform the job. If the applicant meets the criteria, the human resources staff forwards the information to the appropriate department or person who is interviewing the applicants. Human resources personnel do not use the training and experience evaluation forms to qualify an applicant's intelligence, personality type, or social behavior.

The overall purpose of a business's equity goals should be to

Improve equity in the work environment. The company's goals may be short-term or long-term, but they should be geared toward improving equity overall. Government sets equity standards for businesses. Encouraging employees to suggest changes might be a subgoal that would help improve equity. Controlling company expenses is a financial goal.

Once a SWOT analysis identifies an internal strength, a business can use that strength to take advantage of a(n)

External opportunity. A SWOT analysis is the systematic evaluation of a business's internal strengths and weaknesses and external opportunities and threats. Once the analysis identifies an internal strength, businesses generally use that strength to take advantage of an external opportunity that has been identified. Being able to match strengths to opportunities is one of the advantages of conducting a SWOT analysis. For example, having modern production facilities is a strength that allows a business to take advantage of the opportunity to expand into new markets. A marketing strategy is a plan of action for achieving marketing goals and objectives. Operating procedures are the steps a business follows to perform certain tasks. Promotional techniques are methods of achieving promotional goals.

When businesses use only external recruiting, their employees often

Feel they have little chance of promotion. Employees of companies that use nothing but external recruiting feel they have little chance for promotion if outsiders are routinely brought in to fill vacancies. They also feel that their hard work is unappreciated, and this may reduce their productivity. This kind of situation often damages employee morale.

What is an important element of all businesses that managers must control?

Finances. Controlling the finances of a business is critical if the business wants to succeed. Managers need to understand the finances and be able to use financial tools, such as income statements and balance sheets, to monitor the business's income and expenses. Managers need to be prepared to take action to correct problems with the bottom line if financial controls indicate that the business is losing money. It is not possible to control competitors. Benefits and incentives are advantages or payments employees receive in addition to their wages. Businesses usually establish benefit and incentive programs that are comparable to those of similar businesses in the same industry. Reducing benefits and incentives is a step that managers might take if they identify a problem with the business's finances.

One of the main reasons why a business conducts a market analysis is to

Forecast sales. Businesses need to gather and analyze marketing information in order to make decisions about what to do in the future. A main concern for most businesses is forecasting sales. They want to be prepared to sell the right products in the right amount to the right market over a period of years. To do that, they must understand changes in the market and in economic conditions. By analyzing current market information, businesses often are able to make fairly accurate sales forecasts which allow them to plan for the future. Conducting experiments, identifying samples, and observing consumers are research methods that businesses use to obtain the type of marketing information they need to analyze.

What is an important step that businesses must take in order to set the prices of goods or services?

Gather cost information. An important step in setting the prices of goods or services is gathering complete information on the cost of selling the good or service. This information includes how much it costs to produce, buy, transport, market, etc., the specific good or service. Businesses need this information in order to set prices that adequately cover all the selling costs and also earn a profit. Obtaining credit reports, reviewing advertising data, and analyzing marketing plans are not steps in setting the prices of goods or services.

Which of the following is a benefit of writing a business plan:

Generating new ideas. Generating new ideas and solutions is just one of many benefits of writing a business plan. Writing a business plan will not necessarily help your business to gain publicity, avoid deadlines, or find new employees. As a matter of fact, writing the plan helps you to set deadlines.

Key performance indicators used to assess business performance should align with the business's

Goals and objectives. A common way to assess the performance of a business plan is to develop and use key performance indicators. Key performance indicators are an effective way to track, measure, and improve business results. Aligning key performance indicators with business goals and objectives can help an organization stay focused on the aspects of the business that are most important to it. Key performance indicators are not necessarily aligned with a business's operating expenses, corporate culture, or payroll and benefits.

A business's customized software program is to be installed and ready for operation in three weeks. The quickest and most effective way to train all software users would be through

Group training. Group training is presented to small or large groups at one time. Since employees are learning a customized software program, group training would be an effective way to explain the operation of the new software package to all software users quickly. Although many independent course are available, employees need to learn how to operate a customized software package. An internship is training in which schools and businesses cooperate to provide on-the-job practice for learners. Job rotation is training allowing an employee to learn several related jobs, one at a time, until the training process has been completed.

As part of its market analysis, the SVM Company estimates the increases in demand for its products over a set timeframe for a particular market segment. The SVM Company is attempting to analyze the market's

Growth rate. A market analysis is a systematic study of the market. The growth rate of a potential market is an important consideration when conducting a market analysis. If data indicate that the market is expected to grow, then it is possible that there could be a greater demand for the business's products in the future, so the business must take steps to prepare to meet the needs of the growing market. If market growth is expected to decline, the business needs to know so it can make changes and perhaps try to identify a new market. Market size is the number of possible buyers in a given market at a given time. Profitability is the degree or level of profit of a business or a product. A business does not evaluate a market's performance, but its potential to buy.

The objectives that managers develop for a business to attain are also intended to serve as operating

Guidelines. A business's objectives are designed to serve as guidelines for daily operating activities. Once an objective is developed, the business can design jobs and activities that will make it possible to attain the objective. Objectives are goals to be attained rather than strict standards or requirements to be met, or regulations to follow.

One reason for screening résumés is to determine if the applicants

Have the desired skills to perform a specific job. It isn't feasible for businesses to interview every person who submits a résumé for a job opening. Therefore, businesses screen résumés, which is the process of reviewing résumés to determine which candidates have the qualifications to perform the job. For example, if a job requires a worker to type 50 words a minute, and the applicant's résumé indicates that s/he types 70 words a minute, then the applicant would meet the business's criteria for performing one aspect of the job at an efficient level. A résumé is a document and doesn't adequately provide insight or enough information about the applicant's ability to improve a skill, his/her ethics, organizational skills, and efficiency levels.

Findley Construction Company has been awarded a major contract to work on a new shopping mall and arena that is being built in the city's business district. Because the project requires special skills and knowledge, Nick, Findley's human-resources manager, will need to acquire new workers to carry out the many tasks associated with the project. Nick is responsible for _________ workers, which is an activity associated with the __________ management function.

Hiring, staffing. Staffing is the management function of finding workers for the business. A primary staffing activity is hiring employees to perform the work. Another important staffing activity involves training the employees to perform the work correctly. Directing is the management function of providing guidance to workers and work projects and often involves influencing employees to behave or work in a certain way. Controlling is the management function of monitoring the work effort. Organizing is the management function of setting up the way the business's work will be done.

Existing businesses need to provide what kind of data in the financial plan component of their business plans?

Historical financial data. Existing businesses need to provide historical financial data (from the last three to five years) in their financial plans. Management résumés, contracts, and licenses belong in the appendices. It is not necessary to provide financial data from competitors.

What is an important question that a manager must consider when hiring a new employee?

How will the company compensate this worker? Staffing is the management function of finding workers for a business. Recruiting, interviewing, hiring, and training are staffing activities. When hiring an employee, the manager must consider how the business will compensate the employee. This involves determining the appropriate salary range for the job, insurance, vacation, and other benefits. The company's vision is a consideration of the planning function of management. Workload distribution is a consideration of the organizing function of management. Product quality standards are considerations of the controlling function of management.

Businesses realize that it is almost impossible to appeal to all customers which is why most businesses try to

Identify market segments. A market segment is one of the groups into which the total market is divided. The marketplace today is very diverse and includes consumers from many backgrounds who have different lifestyles. As a result, it is virtually impossible to appeal to all consumers. Therefore, businesses try to identify the market segment that wants and needs their particular products. By identifying the appropriate market segment, businesses can focus on those individuals who are the most likely to buy their goods and services. Marketing goals are the objectives a firm seeks to reach with its marketing plan. Distribution channels are paths, or routes, that goods or services take from the producer to the ultimate consumer or industrial user. A guarantee is a promise made to the consumer that a product's purchase price will be refunded if the product is not satisfactory.

Which of the following is a beginning step to take in handling an employee complaint:

Identify the problem behind the complaint. Employee complaints do not always address the actual problem but only the results of a problem. Before a complaint can be resolved, the problem that has caused the complaint must be identified. The individual investigating the complaint should do so in an objective manner without letting personal judgment interfere in the investigation. Considering all possible solutions and documenting the resolution to the complaint are later steps in dealing with complaints.

As a result of reviewing competitors' promotional activities while conducting a competitive analysis, a business might decide to

Implement similar activities. When businesses conduct a competitive analysis, they consider their competitors' promotional activities because promotional activities have an impact on a business's success in attracting customers and selling products. As a result of analyzing competitors' promotional activities, a business might decide to use similar activities because they have proven to be effective. A business would not decide to eliminate all advertising. Promotional activities do not include pricing strategies or sales training. Other aspects of a competitive analysis might indicate that a business should revise its pricing strategies or provide additional sales training.

As a result of conducting a competitive analysis, businesses are often able to determine

In which markets to compete. Not all businesses have the resources or capabilities to compete in all markets. Therefore, businesses should analyze the competitive environment to determine the markets that offer the most potential. Depending on the results of a competitive analysis, a business might decide to focus on a specific target market or to develop a unique product that will appeal to a niche market. The intent is to find the most appropriate markets that will give the business the opportunity to grow and be profitable. A business does not conduct a competitive analysis to determine the number of employees to hire. The government encourages competition rather than attempting to control it. A business conducts an economic analysis to determine the overall health of the economy.

The purpose of maintaining daily financial transactions is to keep track of the business's

Income and expenses. Financial transactions, such as selling products and paying bills, affect the financial condition of the business. The purpose of maintaining daily financial transactions is to make sure the business has sufficient income to cover expenses, and is financially sound. For example, transactions that bring in money are necessary to offset the bills that the business must pay. Businesses do not maintain daily financial transactions to keep track of payroll and benefits, assets and liabilities, or stocks and bonds.

Which of the following venture-harvesting methods usually supports a venture's future growth and facilitates the business owner's exit

Initiating a public stock offering. Venture harvesting is the stage in the entrepreneurial process in which the entrepreneur exits the business and collects (harvests) his/her share of the venture investment. There are many ways to harvest a venture, which includes closing the business entirely; selling the business to another person or company; keeping the business intact and releasing cash flows; and taking the company "public" through an IPO (initial public offering). IPO means that the entrepreneur is selling stock to the public and giving up control of some or all of the business; over time, the venture becomes a public corporation. By incorporating the business, the owner is selling stock, which generates money so the company can continue and grow. Ceasing business operations means that the business cannot grow because it is closed. Setting up a trust fund and developing a licensing program does not help the owner exit the business nor does it ensure the business's growth.

One activity associated with the directing function of management is

Instructing employees. Directing is the management function of providing guidance to workers and work projects. When managers provide employees with guidance, they are often providing employees with instructions about performing tasks in a certain sequence or manner. Establishing goals are planning activities. Determining tasks are organizing activities. Interviewing applicants are staffing activities.

What is a company using when it lets its current employees know about a new job opening and encourages them to apply?

Internal recruiting. Internal recruitment involves seeking workers from within the business. External recruiting is seeking workers from outside the business. Employee turnover is the rate at which employees are hired or leave the organization. Group incentives reward employees for cooperative efforts.

Training that is provided by company management or the company's own training staff is known as __________ training.

Internal. Internal training is provided by the company and usually conducted within the business. Internship is training in which schools and businesses cooperate to provide on-the-job practice for learners, and learners receive classroom instruction as well as on-the-job experience. Vocational training is provided by an educational institution outside the business. External training is training conducted by persons or organizations outside the business.

Which of the following assets usually is a main concern when developing a business's budget:

Inventory. Inventory is all of the stock, or merchandise, that a business has on hand. Inventory is often a business's largest asset. When developing a budget, businesses consider the amount of inventory they need to buy in order to produce or sell products. In many cases, buying inventory is a major expense and businesses must plan to have the funds available to pay that expense. Without sufficient inventory, a business might not be able to operate. Investments are assets but they usually are not a main concern when developing a budget. Interest is money payments for the use of borrowed money. Not all businesses have investments or earn interest. Business insurance is not considered an asset.

What is one question that a business must answer when identifying a potentially profitable target market?

Is the market responsive? It is important for a business to know whether customers would, in fact, be interested in its products and also be willing to buy them. If it is a responsive market that has interest and the ability to buy, the business has a better chance of being profitable. Considering form utility, variable expenses, and advertising media are important; but these questions do not specifically pertain to identifying a target market.

Which of the following is an example of a flexible 40-hour weekly schedule in which employees are required to be on the job from 10:00 a.m. to 2:00 p.m., Monday through Friday:

Jim works 7:00 a.m. to 3:00 p.m. Flexible schedules give employees various options in the times they work each day but usually require them to be on the job during certain core hours. In this case, employees are required to be on the job from 10:00 a.m. to 2:00 p.m. but have a choice as to when to schedule the remaining four hours. Jim has chosen to work from 7:00 a.m. to 3:00 p.m. which includes the core hours between 10:00 and 2:00. The other employees are working flexible 40-hour weeks, but they are not scheduling themselves to be on the job during the entire four-hour core period.

When interviewing a job applicant, it is important for the interviewer to focus on asking questions that are related to the applicant's

Job performance. The purpose of an interview is to determine if the applicant meets the qualifications to perform the job. Therefore, the interview questions should relate directly to the job in terms of the applicant's education, skills, training, and work history. Although ethics are important, the applicant's personal interests and political beliefs are not usually related to his/her ability to perform a job. An applicant's thoughts about the company may be useful or interesting, but should not be the primary focus during the interview and questioning process.

An internal method of recruiting employees is through

Job postings. Job posting makes known to a firm's current employees that a job opening is or will be available within the company. Using direct mail to contact prospects, recruiting on college campuses, and obtaining employees through employment agencies are external methods of recruiting because they go outside the business to find workers.

What is a potential weakness a manager might identify in a SWOT analysis?

Lack of management depth. A SWOT analysis identifies possible strengths, weaknesses, opportunities, and threats. A lack of management depth is a potential weakness that a manager might identify. High-quality products are examples of a potential strength. Competitors failing is an example of potential opportunity. Low-cost foreign competition is an example of a potential threat.

The fundamental activity associated with the planning function of management involves

Looking ahead. The management function of deciding what will be done and how it will be accomplished is planning. A primary aspect of the planning function is determining the goals or desired outcomes, which involves looking ahead. Measuring the success or achievement of goals is a controlling activity. Motivating employees is a directing activity. Establishing structure is an organizing activity.

Determine which of the following statements is true:

Managing diversity is an ongoing process. Managing a diverse workforce and ensuring equitable opportunities for employees are ongoing processes. Businesses can determine whether their equity efforts are on target by setting goals and monitoring their progress toward those goals. From time to time, the goals may need to be changed as the needs of the business change.

Mary is planning to open an educational toy store. She has determined the number of families with children in the area, the average family income, and typical buying patterns. Mary will include this information in which section of her business plan?

Market segment analysis. The market segment analysis includes a description of the target market and buying behavior of potential customers. The trading area analysis includes local demographic, geographic, and economic data. Proposed goods and services specifies types of goods and services to be offered, potential suppliers, and inventory policies. Projected income and expenses lists projected sales and expenses.

Identifying market segments helps a business to develop appropriate

Marketing strategies. Identifying markets involves dividing the whole market into smaller groups that share common characteristics. When a business identifies different markets, it can then select the group (target market) that is most likely to buy its products. After selecting the target market, the business can develop a plan of action and carry out activities that will appeal to the target market and encourage it to buy its products. Businesses do not identify market segments to develop appropriate economic forecasts, organization records, or leadership styles.

If a firm discovers a competitor's weakness when it is conducting a competitive analysis, the firm has often uncovered a(n)

Marketplace opportunity. A competitive analysis is the process of comparing a firm's performance (e.g., profits) with that of its competitors to see how it is doing by industry standards. Uncovering a competitor's weakness can provide a firm with an opportunity to increase its market share. For example, if an analysis indicates that a competitor does not have the resources to effectively reach a market segment, the firm has uncovered a potential opportunity to expand into another market. An internal threat is a weakness within the company, such as outdated equipment. Ethics are the basic principles that govern a person's behavior. Product liability is a producer's responsibility for any injury that the business's products may cause.

The new business owner set a goal of selling $50,000 of goods in the first six months. This is anexample of a(n) __________ objective.

Measurable. An objective must include a way that it can be measured and evaluated in order for it to be useful. Setting a certain sales goal over a specific time period allows a company to measure its success in meeting the objective. Staffing objectives involve setting goals for hiring employees. Advertising objectives involve setting goals for promoting the business. Inventory objectives involve setting goals for purchasing and maintaining goods in stock.

It's important not to confuse weaknesses with

Mistakes. It's important not to confuse weaknesses with mistakes. Every business occasionally commits an error. One mistake does not constitute a weakness, but making the same mistakes over and over is certainly a cause for concern. Weaknesses would most likely not be confused with resources, strengths, or opportunities.

A company's training and development program is influenced by a variety of external factors such as changes in

Modern technology. A company's training and development program is influenced by both internal and external factors. External factors include changes in technology, the economy, and the competition. Internal factors include changes in the company's needs; employees' skills; and the education, experience, and work values of employees.

Which of the following is an activity that a business performs when conducting a competitive analysis:

Monitors rivals' marketing strategies. A competitive analysis involves gathering information about a business's competitors. A business obtains the information by monitoring its competitors' marketing strategies—the activities the competitors use to market their products. The business may look at the competitors' products, web sites, advertisements, and other promotional literature to gather information. Then, the business can summarize and evaluate the information that it collected to determine its competitors' strengths and weaknesses in the marketplace. By knowing its competitors' strengths and weaknesses, the business can take steps to improve its market share, if necessary. A competitive analysis does not involve setting productivity goals, calculating economic data, or developing selling procedures.

What directing activity involves rewarding employees with positive feedback and monetary incentives?

Motivating. Directing is the management function of providing guidance to workers and work projects. A directing activity is motivating employees, which is prompting them to continue a certain behavior or to take a certain action. When a manager provides employees with positive verbal feedback for their performance or offers monetary incentives for them to achieve certain goals, the manager is motivating employees. Supervising involves monitoring the work effort. Coordinating involves linking activities to achieve a desired outcome. Producing involves combining inputs to create outputs—making goods or services.

The management plan component of a business plan addresses which of the following:

Organizational structure. Organizational structure is addressed in the management plan component of a business plan. Cash flow is addressed in the financial plan. Market research is addressed in the market analysis. Legal documents are included in the appendices.

Jackie is a manager with the SDP Company and is establishing a systematic way for her department to complete a long-term assignment. What function of management is Jackie carrying out?

Organizing. The management function of setting up the way the business's work will be done is organizing. Organizing involves determining how to best use the available resources (i.e., financial, material, human) in the most efficient manner to achieve the business's goals. Leading is guiding or directing the actions of others in a desired manner. Staffing is the management function of finding workers for a business. Controlling is the management function that monitors the work effort.

What is one of the best internal sources a business manager can use to predict sales for a particular date?

Past sales records. These records are a valuable source of internal information that help to indicate a predictable trend in sales. These records are useful because they are based on facts. Trade magazines, actions of competitors, and opinions of consultants are external sources of information.

Your company sells technical computer equipment to businesses. Which of the following types of promotion would the company probably use:

Personal selling. The sale of technical equipment requires explanation and discussion of features and benefits between the salesperson and customer. Broadcast and billboard advertising would not be effective for technical equipment. Publicity is any nonpersonal presentation of ideas, goods, or services that is not paid for by the company or individual which benefits from it.

What type of remedial action should a company take to encourage employees to follow standards and rules so that violations don't occur?

Preventive. Preventive discipline is intended to prevent violations before they occur. Corrective discipline focuses on discouraging further rule or performance violations after infractions have occurred. Progressive discipline calls for administering progressively more severe penalties each time an offense is repeated. Constructive criticism involves providing feedback on workplace behavior to employees as a means of fostering improved performance.

Which of the following is a factor in the internal environment that a business should consider when conducting a situational analysis:

Pricing strategies. Internal factors are those factors within the business itself that have an impact on the business's marketing effort, such as the business's pricing strategies. When conducting a situational analysis, businesses should consider factors in the internal environment as well as external factors. For example, as a result of a situational analysis, a business might discover that the economy is slowing down. Then, it might review its pricing strategies to make adjustments to remain competitive during difficult economic times. If a business ignores the internal factors that affect its marketing effort, it may lose customers and sales because it did not adapt to change. Advertising regulations, industry trends, and local populations are external factors that a business should consider when conducting a situational analysis.

Which of the following is an example of a direct channel of distribution for consumer products

Producers using catalogs to sell. Direct distribution is a channel of distribution in which goods and services move directly from the producer to the consumer or industrial user. There are several ways to distribute products directly to consumers. One of these involves producers developing catalogs, and sending catalogs to customers so the customers can order directly from the producer. This channel eliminates middlemen. Direct channels of distribution do not involve wholesalers storing shipments, businesses buying from many vendors, or agents representing manufacturers.

One of the ways that training and human resource development benefits businesses is by increasing employees'

Production and quality of work. Training can increase employees' knowledge of job skills and processes, and often improves their abilities to deal with customers effectively. As a result, their production and quality of work increases, which result in increased profits for the business. Training and human resource development decreases employees' rate of turnover and their need for supervision. Training does not necessarily increase employees' salaries and benefits packages, which often are determined by number of years on the job and their levels of authority.

What form of discipline is being used when an oral warning, a written warning, suspension, and finally discharge are used to discipline an employee?

Progressive. Progressive discipline is based on the idea that each time an offense is repeated, the offender is given a progressively more severe penalty. Open-door is a management policy in which employees are permitted to voice their complaints, grievances, or problems to successively higher levels of management. Preventive discipline centers on managing people in ways that will prevent infractions from happening. Stairstep is not a term used in connection with discipline.

In order to effectively sell to an individual, what should a salesperson do after recognizing that the individual has a need?

Provide information. To sell effectively, salespeople should provide the information about a good or service that will satisfy the individual's needs. If individuals already know what they need, the salesperson may only need to show them the product and answer a few simple questions. However, if the individuals are not sure about what they want, a salesperson may need to provide a lot of information about price, benefits, uses, warranties, etc. Providing the right information will help make the sale. Only when individuals have all the information they need, will the salesperson be able to sell a product. After an individual decides to buy, a salesperson might offer to arrange financing. Brochures may be used to provide information, but they are prepared in advance.

Caitlin is the manager for a busy accounting department and has decided not to replace the payroll specialist who recently resigned. She wants Martin, who currently handles the firm's accounts-receivable, and David, the accounts-payable clerk, to jointly take over the payroll-processing responsibilities. She also wants her assistant Fiona to take over some Martin's and David's current tasks. What organizing activity is Caitlin performing?

Reallocating resources. The organizing function of management sets up the way the business's work will be done. Often, managers such as Caitlin need to reorganize employees' workloads in order to accomplish the business's goals. Providing employees with feedback is a controlling activity. Providing employees with training is a staffing activity. Establishing goals is a planning activity.

When a business processes a customer's payment, it records the payment as a

Receipt of cash. When a business receives payment from a customer, it records the amount of payment as a receipt of cash. As customers pay, the business's cash increases. The increase in cash also increases the assets of the business. When a business processes a customer's payment, it does not record the payment as a debit transaction, a type of sale, or a financial expense.

To maintain accurate records of every financial transaction, businesses keep copies of

Receipts. Financial records are documents containing information related to the amount of money going into and going out of a business. A receipt is a written or printed document that acknowledges a financial transaction—it is a way to keep track of a financial activity. Reports, certificates, and contracts may contain information about a business's financial activities, but these documents can be used for other business purposes.

Which of the following should effective managerial planning do:

Reduce uncertainty. Planning is the management function of deciding what will be done and how it will be accomplished. Planning activities focus on deciding what will be done and setting goals that the business eventually wants to achieve. When plans are communicated to employees so they understand where the business is headed, it can reduce uncertainty and confusion. The organizing function of management establishes a chain of command.

A business's promotional activities should be coordinated so that they

Reinforce each other. Each promotional activity should support the other. For example, displays should feature the products being promoted in advertisements. Promotional activities should not compete with each other, present contrasting views, or function independently.

Which of the following guidelines would be the most appropriate for a supervisor to follow when administering remedial action:

Resume a normal attitude toward the employee as quickly as possible. While the supervisor may find this difficult to do, it is important because expecting further problems with the employee may actually cause them to occur. The immediate supervisor should handle disciplinary action, particularly minor problems. Action should be taken promptly so that the connection between the infraction and the penalty does not become blurred. Remedial action should be taken in private, without coworkers present so that the employee's dignity and her/his status in the organization can be preserved.

It is important for a business to evaluate the financial condition of a potential vendor during the vendor-selection process to assess the

Risk levels of doing business with the vendor. If a vendor is not financially stable, there is a risk that the vendor may not have the resources to meet the business's needs. And, if the vendor's financial condition is extremely poor, the vendor may go out of business. A lack of financial resources may affect the vendor's products, its level of customer services, and its lead times.

The starting point for the development of a company-wide budget is developing a

Sales forecast. The sales forecast is required to develop the sales budget. The budgeted income statement combines all budgets to show expected revenues and expenses. The balance sheet is a snapshot at a particular point in time of a business's assets, liabilities, and owner's equity. The balance sheet is usually prepared the last day of the accounting period.

One procedure for determining future hiring needs involves analyzing

Sales volume. Sales volume is the amount of a business's sales. Businesses often analyze sales volume over a period of time when determining future hiring needs. For example, if a business's sales have increased steadily over a period of time, the business might decide that hiring additional salespeople will help to increase sales even more. The increased sales might also indicate that the business needs to hire additional support staff to fill orders and provide customer service. Merit pay is a salary increase based on performance. Job security is the assurance that employees will keep their jobs. Determining future hiring needs does not involve analyzing formal training.

Which of the following factors should a business consider when conducting a comprehensive market analysis:

Segment size, competitors, and demand. A market analysis involves collecting information about a group (segment) that may have an unfulfilled desire for something and is willing and able to pay for it. A business analyzes various segments to determine if it is profitable to market its products to those segments. The market analysis considers the size of the market segment, the product demand, and the competitors it may encounter. A strategy is a plan of action for achieving goals or objectives. Policies are general rules that a business's employees must follow. Frequency is a quantitative measure of the average number of times a target consumer is exposed to an advertising message. Reach is a quantitative measure of the number of different people in the target audience who are exposed at least once to an advertising message. Reach and frequency are considerations when selecting advertising vehicles, but not when conducting a market analysis.

When an automobile company markets a van to families and a luxury sports car that appeals to single, working adults, it is engaging in ____________ marketing.

Segment. Segment marketing is the classification of customers into similar groups in order to appeal to one or more individual segments. An automobile manufacturer that develops different types of vehicles to appeal to different types of drivers is engaging in segment marketing. Local marketing occurs when a business customizes its marketing activities to appeal to customers at a community level. Mass marketing occurs when businesses develop products and implement marketing strategies that appeal to the whole market. Relationship marketing refers to a strategy in which businesses spend time with current and prospective clients outside the business setting to enhance the partnership.

The level of control that a manufacturer wants over product promotion is a factor it must consider when

Selecting its channel members. Channel members are the businesses or individuals who assist in moving goods and services from the producer to the consumer. Businesses consider many factors when selecting their channel members. One factor is the amount of control that the business (producer) wants to have over product promotion. For example, to ensure that retailers effectively promote a new good or service, a producer might develop a training program or a special advertising campaign to inform wholesalers and retailers about the product. Control over promotional efforts are not the primary consideration for a producer when it develops a budget, obtains raw materials, or decides its legal ownership structure.

Some businesses need to select an appropriate channel of distribution because they lack the resources to

Sell directly to the final customer. Indirect is a channel of distribution in which goods and services move from the producer to the channel members and then to consumers or industrial users. Some businesses are not equipped to sell directly to the final customer and need to select an appropriate channel of distribution. For example, some businesses do not have the financial sources to maintain warehouses or own trucks. Selling products to intermediaries that in turn sell to retailers is one way that these businesses distribute their products. Businesses do not select a channel of distribution because they lack the resources to manage the production function, contact a responsible intermediary, or develop an appealing product.

To control various business activities in an effective manner, managers must first

Set appropriate standards. To control business activities effectively, managers must set appropriate standards to be able to measure the productivity of a specific activity. Although controlling business activities might require managers to identify communication channels, request employee feedback, and initiate corrective action, standards must be in place to understand the type of control that is needed.

A mission statement should be

Short, specific, and understandable. A mission statement is a brief summary of what a business owner wants a business to be doing. Effective mission statements are short, specific, understandable, and memorable. They should not focus on products; instead, they should focus on customer needs. They tell who the customers are, what customer needs the business strives to satisfy, and how the business serves the customers. Mission statements should be realistic, not too narrow or too broad. Long, generic mission statements are not as understandable or memorable as short, specific mission statements.

Which of the following are characteristics of tactical planning:

Short-range and specific. Tactical planning is short-range planning (one year or less) of specific actions that the business will take. Tactical plans involve day-to-day operating activities and are usually implemented by lower-level managers. Tactical plans are based on strategic plans. Strategic planning involves long-term planning (more than one year) and focuses on the general future of company. Strategic plans are usually developed by upper management.

Showing products in use is a good selling technique because it

Shows customers product benefits. Product demonstrations enable customers to see for themselves what the product can do for them. Dramatic actions may capture attention but are not good selling techniques. In fact, some customers are "turned off" by such actions. Language that is too technical should be avoided. Interruptions can occur regardless of how carefully the salesperson plans the product demonstration.

Businesses identify market segments by dividing consumers into groups that have

Similar characteristics. Market segmentation is the division of a total market into smaller, more specific groups. The basis of the division is similar characteristics that are geographic, demographic, or psychographic in nature. Some of the groups or segments have unusual interests, but not all of them do. Most people have financial needs, so this characteristic is too broad to consider for market segmentation purposes. When dividing a group by psychographics, the segment has similar rather than inconsistent values.

When an employee's complaints are not resolved by management, the dissatisfaction felt by that employee could

Spread to other employees. When managers fail to take action in resolving employee complaints, employees express their dissatisfaction to other employees and to customers. What was initially a minor problem can become a major controversy. Unresolved complaints can cost a company money, lower employee morale, and damage the company's image.

What management function involves identifying qualified candidates to perform the business's work?

Staffing. Staffing is the management function of finding workers for a business. An important staffing activity is identifying qualified candidates to do the work. To identify qualified candidates, the manager must know what skills are needed to perform the work. Leading involves directing the activities of others. Persuading is convincing others to take a certain course of action. Controlling is the management function of monitoring the work effort.

Burkhart Manufacturing is implementing a new, company-wide computer system. Nadine is in the process of identifying the skills that will be needed to manage the information and maintain the various software applications. What function of management is Nadine focusing on?

Staffing. Staffing is the management function of finding workers for a business. The staffing function identifies qualified candidates to perform the work. To identify qualified candidates, the manager must know what skills are needed to perform the work. Because Nadine is determining what skills are needed to operate the new computer system, she is focusing her efforts on the staffing function of management. Controlling is the management function of monitoring the work effort. Training involves teaching or developing a new skill. Planning is the management function of deciding what will be done and how it will be accomplished.

A good reputation among current clients is a(n)

Strength. A good reputation among current clients is a strength. A strength is any resource or capability your business has that can help you gain a competitive advantage in your industry. A weakness is any limitation or shortcoming your business has that can keep you from achieving your objectives. An opportunity is any favorable situation in the environment surrounding your business. A threat is any unfavorable situation in the environment surrounding your business. A good reputation among current clients is not a weakness, an opportunity, or a threat.

Which of the following could be used to encourage employees to communicate their dissatisfaction to management

Suggestion boxes. Management can place suggestion/complaint boxes in areas accessible to employees such as in break areas or near time clocks. Employees should be given opportunities to contribute to a business's success through a complaint process. Contracts are agreements between two or more parties that are legally binding. A strike is a union strategy in which employees cease working until employers meet their demands. Right-to-work laws specify that union membership cannot be required in order to get or keep a job.

Complaints regarding job evaluations could be categorized as complaints about

Supervision/Management. Employees often complain about the management of an organization and the ways in which employees are supervised. Evaluation is the responsibility of management/supervisors. Complaints about employee compensation deal with pay. Complaints about work environments are categorized as physical surroundings complaints. Complaints about coworkers may be job related, not work related, or about the habits of other employees.

When conducting SWOT analysis, consider strengths and weaknesses in relation to

The competition. When conducting SWOT analysis, consider strengths and weaknesses in relation to the competition. If you and your competitors share the same strength, perhaps it is actually an industry standard. It is not necessary to consider strengths and weaknesses in relation to your business's past or future, or your business's opportunities.

Which of the following is a situation in which producers would want to use short channels of distribution:

The market is located close together. If customers are in one general area, a short channel of distribution is effective. If the market is widely dispersed, the producer would need to use longer channels in order to reduce the number of contacts that need to be made. Small order sizes, many potential customers, and inexpensive products indicate the need to use longer channels.

Which of the following is a true statement about selecting employees:

The selection process is controlled by strict legal guidelines. There are numerous laws governing what businesses may and may not do in the process of selecting new employees. For example, testing specific job skills is legal but some forms of testing are not. Employers may ask about a job applicant's educational background and job experience, but they may not ask the applicant's age, race, national origin, or marital status. The employee-selection process does affect employees' success on the job. A good selection process puts employees into jobs for which they have appropriate skills and at which they can, therefore, be successful.

Why is it important for salespeople to find out something about their customers before trying to sell them a good or service?

To address their needs. Before salespeople can decide which selling technique to use to sell goods or services to customers, they need to find out something about the customers. Each customer has a different need and responds differently to various selling techniques. Effective salespeople obtain information about customers in order to determine their needs and to use the most appropriate selling technique to satisfy those needs. Salespeople often make conversation and ask for information in an attempt to find out something about their customers. Salespeople usually do not expect to develop personal relationships with their customers.

Why is it important to ask job applicants about their training and previous job responsibilities during the interview process?

To determine qualifications. One of the purposes of the interview process is to determine if job applicants have the qualifications to perform the specific job. To determine this, it is important to ask job applicants about their training and previous job responsibilities. This information will indicate their work experience and education background. Businesses often contact references to verify recommendations. Businesses do not ask job applicants about their training and previous job responsibilities to analyze personality types or to establish specifications.

Why is it important for businesses to analyze the competition on a regular basis?

To determine ways to compete. Businesses need to analyze the competition on a regular basis in order to understand their competitors and to develop ways to effectively compete in the marketplace. The competitive environment changes constantly. Therefore, businesses must keep up to date with what their competitors are doing in order to remain successful. Businesses do not analyze the competition in order to eliminate competitors, understand laws regulating competition, or compete on an ethical basis.

Why is it important for a business to select a target market?

To develop strategies to appeal to customers. Each target market is unique, which means that strategies that are effective with one market might not work with another market. Consequently, businesses need to select the target market before developing specific strategies. For example, if the target market consists of teenagers and young adults, the marketing strategies will be very different than if the target market consists of senior citizens. Once the target market is selected, a business can focus on developing the right strategies. Businesses do not select a target market to organize exclusive sales territories, identify the most appropriate vendors, or prepare detailed promotional reports.

Why should purchasing specialists develop positive relationships with their suppliers?

To help ensure that the suppliers will follow through on their promises. Purchasing specialists should develop positive relationships with their suppliers to help ensure that the suppliers will treat them right and follow through on promises made. Developing positive relationships with suppliers won't necessarily prevent supplier theft. Even if a purchasing specialist has good relationships with her/his suppliers, s/he should still locate back-up sources of goods and services. Purchasing specialists should look for ways to reduce the ratio of materials' cost to finished product cost, not increase the ratio.

Which of the following is a reason why managers develop company objectives:

To identify business purpose. One of the reasons why managers develop objectives is to identify the purpose of the business. Determining what a business is and intends to do is the basis for all other company decisions. Therefore, managers establish objectives that the business wants to achieve in order to describe the business's purpose and develop strategies to implement that purpose. Managers do not develop company objectives in order to forecast sales potential, communicate with employees, or solve operating problems.

Which of the following is an example of a company objective that might be developed by top management:

To maintain or increase market share. This is an overall objective for the entire company that would be set by top management. Deciding to hold weekly sales meetings, do a better job of collecting past-due bills, or to keep the billing up-to-date are specific objectives that might be set by department managers.

What is the overall purpose of the Americans with Disabilities Act (ADA)?

To make it possible for qualified individuals with disabilities to get and to keep jobs. The ADA protects workers with physical and/or mental disabilities from discrimination. It does not require businesses to screen applicants with physical and/or mental disabilities. In fact, it forbids businesses from asking job applicants about current or previous disabilities and requires businesses to make their facilities accessible to those with disabilities. However, these are part of the provisions of the law, not its overall purpose.

What is the true purpose of taking remedial action?

To motivate employees to perform at established company standards. Employees who obey the rules are rewarded; those who cannot comply are penalized. This is understood by most employees and widely accepted in our society as a legitimate way of ensuring that all employees work toward organizational goals. Providing consistent punishment is a guideline for supervisors to follow when taking remedial action rather than a purpose of taking remedial action. The unacceptable actions of employees provide supervisors ample reason for taking remedial action.

When interviewing job applicants, why is it important to ask open-ended questions?

To obtain in-depth information. To obtain in-depth answers to questions, it is always best to use open-ended questions when interviewing job applicants. An open-ended question is not a type of question that requires a simple "yes" or "no" answer. An example of an open-ended question is, "What do you like best about your current job?" This type of question requires the applicant to provide a detailed explanation. Assumptive questions check for understanding. The asking of open-ended questions usually lengthens the interview process and generates long answers.

Why do businesses routinely screen job applications and résumés?

To set up interviews. Businesses routinely screen the job applications and résumés they receive in order to select the most appropriate candidates to interview for the available positions. They want to make sure that the applicants have the necessary education and experience to do the job before spending time interviewing them. Businesses usually screen the applications and select the most qualified to interview. Businesses develop job descriptions before advertising the job. Businesses do not screen job applications to prepare personnel records, although the applications usually become part of an employee's personnel record after s/he is hired. Businesses do not screen applications to create pay plans.

Why is it important for a business to conduct a situational analysis during the marketing planning process?

To ward off problems. Businesses conduct situational analyses to obtain information about changes or trends that are beginning to develop in the environment or marketplace. This procedure allows businesses to identify changes at an early stage and ward off potential problems. It is important for businesses to understand changes in their external environment in order to adapt and avoid problems. Without this information, businesses may be unprepared to deal with problems that might cause them to lose their competitiveness or even fail. A business would not conduct a situational analysis to identify customers, forecast expenses, or redesign products. However, a business might redesign products after conducting a situational analysis and finding that they were losing their appeal in the marketplace.

Determine whether the following statement is true or false: The type of product being sold influences the way in which it is sold.

True, complicated products require more selling time. Selling complicated products requires the salesperson to spend a great deal of time learning all about the product and explaining it to customers. Most salespersons try to discover the features/benefits of most interest to the customer and focus on those. This requires adjusting selling techniques to fit the selling situation.

Actual procedures used in budgeting depend mainly upon the

Type of business. Different industries require different budgeting strategies. The larger the business, the more complicated is the budgeting process required. The sales budget predicts sales for a specific period. Capital outlay refers to the amount of cash needed at a particular time such as the opening of a new business. The fiscal year is the time period for which the budget is planned.

Which of the following is a demographic characteristic that businesses often use to identify market segments:

Type of household. Many businesses identify market segments based on demographics, which are the physical and social characteristics of the population. One demographic characteristic is the type of household. Today, the traditional household of two parents and their children is in decline. The average household size is decreasing and there are many households of only one or two people. Also, households might include unrelated people, one parent and children, blended families, grandparents and grandchildren, etc. By identifying these various market segments, businesses will be able to understand their different wants and needs. Style of living and personality are psychographic characteristics. Location of population is a geographic characteristic.

Which of the following is a factor that a business should consider when selecting a channel of distribution

Type of product. A business considers several factors when selecting a channel of distribution. One important factor involves the type of product because different channels of distribution are more effective for certain types of products. For example, a direct channel of distribution might work better for perishable products, while an indirect channel would be satisfactory for durable items that have a long shelf life. Businesses do not consider the return process, the size of the sales force, or the credit policy when selecting a channel of distribution.

One of the purposes of developing a business plan before starting a new business is to

Understand the risks involved. A business plan is the written document that is developed before starting a business. It explains the goals and objectives of the company and how the company intends to achieve those goals. Developing a business plan helps the business to understand the risks it might face, and develop strategies to overcome possible problems. All businesses face some type of risk, and being aware of that often helps the business to be successful. A business plan is not developed to organize the operation, create a safe work environment, or identify a maintenance system.

Which of the following is the first step of effective managerial planning:

Use a systematic approach to establish objectives. Planning is the management function of deciding what will be done and how it will be accomplished. Deciding what will be done involves establishing objectives or desired outcomes. Using a systematic and organized approach helps the business set SMART objectives—objectives that are specific, measurable, attainable, relevant, and time bound. The business develops strategies and procedures for implementation, establishes criteria to evaluate the strategies, and evaluates the quality of the strategies after it sets the objectives.

Which of the following should salespeople stress to undecided customers in order to encourage them to buy:

Value. Value is the amount of satisfaction a good or service will provide a customer. Salespeople often stress the value of goods and services when selling to undecided customers who want to buy but don't know what they want. Salespeople need to sell these customers on the value and benefit of the items in order to encourage them to make a selection and buy. The customers want to buy, but salespeople must help them make buying decisions by selling the value and benefits of the goods and services. Quantity is amount or volume. Loyalty involves being faithful and keeping promises.

A new employee has not been coming to work on time since beginning the job a week ago. Which of the following types of remedial action would be most appropriate:

Warning. A warning lets the employee know that s/he is breaking the rules of the business and what the consequences of that behavior are likely to be. It is usually the first step in remedial action. All of the other alternatives are stronger types of remedial action that would not be appropriate in this situation. Demotion is moving the employee to a lower level job. Suspension is requiring the employee to take time off without pay. Dismissal is firing the employee.

Which of the following is the most effective mission statement:

We create happiness by providing the finest in entertainment for people of all ages, everywhere. A mission statement is a brief summary of what a business owner wants a business to be doing. In essence, a mission statement should define a business's purpose. Effective mission statements focus on customer needs rather than products. They tell who the customers are, what customer needs the business strives to satisfy, and how the business serves the customers. Mission statements should also be specific versus general. If a business's mission statement states that the business wants to generate a profit, it should also explain what the business plans to do to make a profit.

Which of the following is a question that an interviewer should ask a job applicant to obtain in-depth information

What activities do you perform in your current job? The interview process allows the business to learn more about the job applicant, so it can make a suitable hiring decision. To obtain more in-depth information about the applicant, the interviewer should ask open-ended questions—questions that require more than a "yes" or "no" answer. Asking applicants about the activities that they perform in their current jobs forces them to respond with more than a yes or a no; therefore, the interviewer is likely to get more in-depth information from applicants. Asking an applicant if s/he has a college degree, how long the applicant has worked for his/her current employer, and when the applicant is available to start work are examples of closed-end questions. Closed-end questions require short, precise answers and do not provide in-depth information.

Which of the following questions should effective managerial planning answer:

What do we want to do? The management function of deciding what will be done and how it will be accomplished is planning. A primary aspect of the planning function is determining the goals or desired outcomes—determining what we want to do. All activities carried out in the other functions of management—organizing, staffing, controlling, and directing—depend on the answer(s) to the question, "What do we want to do?" Deciding who will do the work is a staffing activity. Measuring the success or achievement of goals is a controlling activity. Determining how to monitor the work effort is a directing activity.

Which of the following is a detail that a buyer should know prior to placing an order for raw materials?

Whether the company has storage space for the raw materials. A buyer needs to know whether the company has storage space for the raw materials. If the company does not have space, then either the buyer needs to postpone her/his purchase or locate space to store the materials. The purchasing specialist doesn't need to know how the finished product will be marketed, which employees will be converting the raw materials into finished products, or who will be purchasing the finished products.

Businesses develop standards for how employees should do their jobs, which are then used to examine or evaluate

Work performance. Standards of performance are the criteria used to determine the acceptability of an employee's productivity or output, to gauge the employee's work in relation to others, or to evaluate employee efficiency on the job. Other types of standards are used to measure profitability (e.g., profit-and-loss statement), expense control techniques, and communication.