MGT 101 Ch 1-5 (Exam 1)

Arnold approached a bank to get a loan for a business he planned to launch later in that year. He explained his business idea and its capital requirements to the bank manager. The manager listened to the plan and asked Arnold to provide a formal document that included a rationale for the business, an explanation of how it will achieve its goals, an analysis of the competition, and estimates of income and expenses among other information. Which of the following documents does the bank expect from Arnold in this scenario? A. a business plan B. a cash flow statement C. a promissory note D. a balance sheet E. a marketing plan

A. a business plan

Financial resources are also known as _____. A. capital B. labor C. barter D. natural resources E. exchange

A. capital

____ relates to the number of goods and services that consumers are willing to buy at different prices at a specific time A. demand B. supply C. elasticity D. balance of payments E. deficit

A. demand

_____ is the process of creating and managing a business to achieve desired objectives. A. entrepreneurship B. bootstrapping C. intrapreneurship D. Innovation E. brainstorming

A. entrepreneurship

Which of the following statements is FALSE about ethics? A. ethical issues are limited to for-profit organizations B. business ethics goes beyond legal issues C. ethical conduct builds trust among individuals and in business relationships D. ethical conflicts may evolve into legal disputes E. regardless of what an individual believes about a particular action, if society judges it to be unethical, that judgment directly affects the organization's ability to achieve its objectives

A. ethical issues are limited to for-profit organizations

A license to sell another's products or to use another's name in business, or both, is called a _____. A. franchise B. cartel C. collateral D. mortgage E. collusion

A. franchise

Standardizing products for the whole world as if it were a single entity is a characteristic of the ____. A. global strategy B. individualized strategy C. domestic strategy D. customization strategy E. national strategy

A. global strategy

Which of the following is a measure that does not yield revenue for the government of the United States, but can effectively limit the quantity of a particular good being imported from Japan? A. quota B. value-added tax C. tariff D. embargo E. subsidy

A. quota

A small business is any independently owned business that employs not more than ____ people. A. 100 B. 500 C. 300 D. 200 E. 20

B. 500

A U.S. company, 3M Inc., owns a film-manufacturing facility in Italy. This is an example of: A. contract manufacturing B. a direct investment C. a joint venture D. licensing E. exporting

B. a direct investment

Economic expansion occurs when: A. fewer goods and services are produced than consumer demand B. an economy is growing and people are spending more money C. a nation's standard of living drops dramatically D. employment levels decline over time E. prices begin to rise and incomes begin to fall

B. an economy is growing and people are spending more money

One of the major reasons people want to own and operate their own business is to: A. avoid the risk of competition B. be their own boss C. avoid multi-tasking D. reduce stress levels E. avoid direct responsibility of the operations

B. be their own boss

Since Eva Carl has decided to use her savings to purchase the rights to own and operate a McDonald's fast-food restaurant rather than starting her own restaurant, she is probably a(n) ____. A. trade creditor B. franchisee C. franchiser D. intrapreneur E. venture capitalist

B. franchisee

A firm's ____ resources are also known as labor. A. economic B. human C. intangible D. financial E. natural

B. human

The Small Business Administration (SBA) is a(n): A. body established by the US Chamber of Commerce to encourage the intrapreneurial spirit in small businesses B. independent agency of the federal government that offers managerial and financial assistance to small businesses C. independent agency created under the GATT to protect small businesses against competition from larger companies D. division of the federal government that is responsible for ensuring that newly formed businesses adhere to the law E. US Congressional agency that regulates the issue of stock by small businesses

B. independent agency of the federal government that offers managerial and financial assistance to small businesses

Suppose Coca-Cola allows a Mexican firm to use its name, formula, and brands in return for a royalty. This arrangement is known as: A. exporting B. licensing C. direct investment D. contract manufacturing E. a joint venture

B. licensing

____ is the primary goal of business. A. charity B. profit C. bureaucracy D. quality E. strategy

B. profit

Advertising, personal selling, coupons, and sweepstakes are forms of the _____ aspect of marketing activities. A. finance B. promotion C. production D. fund raising E. social responsibility

B. promotion

All the groups that have an interest in an organization's success and outcomes are known as the organization's ____. A. agencies B. stakeholders C. owners D. investors E. shareholders

B. stakeholders

_____ is the act of an employee exposing an employer's wrongdoing to outsiders A. fraud B. whistleblowing C. plagiarism D. bullying E. a criminal lawsuit

B. whistleblowing

Common stockholders do not have the right to: A. vote for the board of directors B. vote by proxy C. attend the stockholders' meetings D. exercise preemptive rights E. receive dividends before preferred stockholders

E. receive dividends before preferred stockholders

Judy has realized that she does not like working for others. She wants to open a business in which she will have maximum control and the least interference from government regulation. Which of the following forms of business is best suited for Judy's needs? A. a joint venture B. an S corporation C. a sole proprietorship D. a partnership E. a C corporation

C. a sole partnership

The principles and standards that determine acceptable conduct in business organizations are referred to as: A. social responsibility B. business strategies C. business ethics D. business stances E. corporate citizenship

C. business ethics

A group of nations or companies that agrees to act together as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets is called a(n) ____. A. conglomerate B. licensor C. cartel D. embargo E. licensee

C. cartel

If an employee learned of a significant cost-saving idea from a coworker and then informed management of the idea without revealing its true source, then the employee would be involved in: A. keeping a secret B. career advancement C. plagiarism D. bullying E. bribery

C. plagiarism

A ____ is best described as any independently owned and operated business that is not dominant in its competitive area and does not employ marathon 500 people. A. publicly owned business B. limited liability company C. small business D. publicly traded company E. for-profit corporation

C. small business

Which of the following is an advantage of using an export agent? A. the firm does not have to deal with a middleman B. the firm is not responsible for the procurement and storage of raw materials C. the firm does not have to deal with the red tape of international business D. the firm does not need to worry about product pricing E. the firm dos not need to invest in research and development

C. the firm does not have to deal with the red tape of international business

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called ____. A. intrapreneurs B. category captains C. venture capitalists D. trade debtors E. franchisers

C. venture capitalists

A large number of _____ cases result in retaliation against the employee, even though the government has tried to take steps to protect workers and to encourage reporting of misconduct A. executive B. white collar crime C. whistleblowing D. petty theft E. federal

C. whistleblowing

____ is best described as the lack of funds to operate a business normally. A. debt financing B. trade credit C. franchising D. trade deficit E. undercapitalization

E. undercapitalization

Which of the following is an example of an intangible product? A. a movie dvd B. a sandwich C. a sports care D. a music concert E. jewelry

D. a music concert

Which of the following forms of business organizations restricts the number and types of shareholders and is difficult to form and operate? A. a sole proprietorship B. a cooperative C. a limited liability company D. an S corporation E. a C corporation

D. an S corporation

Apple Inc., a leading manufacturer of cell phones and tablets, hires Taiwan's Foxconn Technology Group, whose subsidiary assembles Apple devices in factories in China. Which of the following refers to the business arrangement between Apple and Foxconn? A. exporting B. licensing C. a direct investment D. contract manufacturing E. a joint venture

D. contract manufacturing

____ is the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders. A. a code of conduct B. a code of ethics C. business ethics D. corporate citizenship E. whistleblowing

D. corporate citizenship

Exporting may occur through ____, which involve bartering products for other products rather than currency. A. export agents B. free-trade agreements C. direct selling D. countertrade agreements E. outsourcing

D. countertrade agreements

Nathan started the first outlet of Dynamic Gym in NYC in 1995. The business expanded over time, and Nathan became the owner of a chain of gyms in New York State. Though the business had potential to expand outside New York, Nathan did not want to take the risk or responsibility. Hence, he decided to sell the license to own and operate gyms in the name of Dynamic Gym to independent owners. In return, he charged them an initial fee and a small share in the monthly profits. In this scenario, Nathan is a(n) ____. A. franchisee B. intrapreneur C. angel investor D. franchiser E. venture capitalist

D. franchiser

Which of the following statements is true of joint ventures? A. it enjoys reduced government regulations when compared to general partnerships B. it is a form of business ownership that is taxed as though it were a partnership C. it is set up not to make money as an entity but so that its members can become more profitable or save money D. it is popular in situations that call for large investments E. it restricts the number and types of shareholders in the organization

D. it is popular in situations that call for large investments

Lever Brothers changed the formula of its bar soap to match different countries' water conditions and washing habits. This is an example of: A. globalization strategy B. outsourcing C. strategic alliance D. multinational strategy E. joint venture

D. multinational strategy

The term social _____ refers to a business's obligation to maximize its positive impact and minimize its negative impact on society A. citizenship B. strategy C. ethics D. responsibility E. rule

D. responsibility

Which of the following statements is true of preferred stockholders? A. they are eligible to vote by proxy B. they are the voting owners of a corporation C. they have the right to exercise preemptive rights D. they have a claim to profits before other stockholders do E. they are generally the decision-makers in the day-to-day running of an organization

D. they have a claim to profits before other stockholders do

Which of the following is likely to cause a trade deficit? A. when a country invests more on producing domestic goods than services B. when a country focuses on increasing the domestic output of one sector over another C. when a country focuses on long-term benefits than short-term gains D. when a country reduces taxes on imports E. when a country increases export of products and services

D. when a country reduces taxes on imports

Which of the following forms of business ownership provides limited liability, but is taxed like a partnership? A. sole proprietorship B. a cooperative C. a C corporation D. an S corporation E. a limited liability company

E. a limited liability company

A set of formalized rules and standards that describes what a company expects of its employees is called a(n) ____. A. contractual capacity B. consumerist code C. moral philosophy D. social responsibility E. code of ethics

E. code of ethics

Norton is a human resource manager at a large multinational company. After a drastic drop in revenue, his company is thinking of ways to correct the situation. At a meeting with the top management, the CEO suggested that 20 percent of the employees should be eliminated. This move wold help the company cut costs and continue functioning on the current projects. In this scenario, which of the following strategies is this MNC planning to use? A. debt financing B. intrapreneruship C. crowdsourcing D. franchising E. downsizing

E. downsizing

____ is the study of how resources are distributed for the production of goods and services within a social system. A. public relations B. sociology C. demographics D. psychographics E. economics

E. economics

Obeying the law is a business's _____. A. right B. choice C. economic responsibility D. legal responsibility E. ethical responsibility

E. ethical responsibility

_____ refers to all activities concerned with obtaining and managing money and using it effectively. A. public relations B. marketing C. production D. advertising E. finance

E. finance

Which of the following statements accurately describes intrapreneurs? A. employees who become a part of a company's board of directors through internal promotions are referred to as intrapreneurs B. entrepreneurs who sell the rights to use their products to independent owners are intrapreneurs C. entrepreneurs who are involved in international business are referred to as intrapreneurs D. independent investors who help a company raise capital through internal financing are intrapreneurs E. individuals in large firms who take responsibility for the development of innovations within the organization are intrapreneurs

E. individuals in large firms who take responsibility for the development of innovations within the organization are intrapreneurs

Andrew, a pharmacist, realized that he should stock extra supplies of a particular medicine to respond to an outbreak of a particular infection in the city. Lacking sufficient capital to purchase the extra inventory, he turned to his bank and asked to borrow a predetermined sum of money. Which of the following sources of funding does this scenario best illustrate? A. trade credit B. initial public offering C. venture capital D. equity financing E. line of credit

E. line of credit

_____ involves taking someone else's work and presenting it as your own. A. conflict of interest B. bullying C. inspiration D. bribery E. plagiarism

E. plagiarism