Unit 1 Exam Review
Organizations often report attempting many things to encourage ethical conduct among their employees. Which of the following is NOT one of these efforts organizations try?
Having two sets of ethics guidelines - one for managers and one for employees
Which of the following methods did Grossman use to start Wild Planet?
He started the business from scratch.
Which term describes an increase in the general level of prices over time?
Inflation
__________ refers to the ownership of patents, copyrights, and trademarks.
Intellectual property
Which of the following best describes telecommuting?
It allows employees to work in the office part-time and work from home part-time or work completely from home, making only occasional visits to the office.
Which of the following is a feature of a mission statement?
It defines the core purpose of an organization.
Which of the following best describes a not-for-profit organization?
It does not pursue profits but instead seeks to service its community.
Which of the following best describes a recession?
It is a decline in a country's gross domestic product for two consecutive quarters or more.
Which of the following best describes a firm's code of ethics?
It is a statement of a firm's commitment to certain ethical practices.
Which of the following best describes unethical behavior?
It is behavior that does not conform to a set of approved standards of social or professional behavior.
Which of the following best defines amoral behavior?
It is behavior that occurs when a person has no sense of right and wrong and no interest in the moral consequences of his or her actions.
Which of the following best describes how a wholly owned subsidiary is formed?
It is formed when an investing firm purchases or establishes a foreign (or domestic) facility.
Which of the following best describes the federal funds rate?
It is the interest rate banks charge each other to borrow money overnight.
Which of the following best describes the discount rate?
It is the interest rate that banks pay when they borrow funds from the Fed.
Which of the following best describes labor, a factor of production?
It refers to any physical or intellectual work that people contribute to a business' production.
Which of the following best describes socially responsible investing (SRI)?
It refers to purchasing shares only in companies that meet certain standards of corporate social responsibility.
Which of the following best describes intellectual property?
It refers to the ownership of patents, copyrights, and trademarks.
Which of the following best describes exporting?
It refers to the process of entering foreign markets by selling domestically produced products in other countries.
A(n) ________ is someone who takes the risk of creating, organizing and operating a business, usually to satisfy a need in the marketplace that is not being adequately met.
entrepreneur
Social Environment
is an interconnected system of different demographic factors, such as race, ethnicity, gender, age, income distribution, sexual orientation, and other characteristics.
A whistle-blower ________.
is someone who reports misconduct occurring in his or her workplace
Revenue
is the amount of money generated by a business by either selling goods or performing services.
Identity Theft
is the illegal gain and use of personal information.
Real Capital
is the physical facilities used to produce goods and services.
Supply chain
is the process by which products, information, and money move between supplier and consumer.
The United States' economy can best be described as which of the following?
Market
Which of the following is an example of a joint venture?
A company joining forces with a foreign competitor to create a new business that involves shared possession and control
Miranda is a certified financial planner who has opened a business designed to help people with poor credit and financial problems get back on their feet. She charges a low fee for her services. What type of entrepreneur is Miranda?
A social entrepreneur
In which of the following would someone studying macroeconomics most likely be interested?
A substantial nationwide decrease in the demand for housing
Isabella has no sense of right and wrong and no interest in the moral consequences of her actions. Which of these describes Isabella's behavior?
Amoral behavior
Mary makes holiday costumes that she sells to individuals on the website Etsy.com. Mary's business is an example of what type of business?
An e-commerce business
Purchasing the factory corresponds to which of the following factors of production?
Capital
Which of the following are complementary goods and/or services?
Cars and car tires
What is dumping?
It is selling a product at a price below its cost in a foreign country to drive competitors there out of business.
The following are new companies in different situations. Which business has the greatest risk of failure?
March Company offers extremely lenient payment terms to its customers to attract more of them.
Marie, a pastry chef, wants to start a business with flexible working hours so that she can tend to other responsibilities at home. She decides to take orders over the phone and supply chocolates to various retail stores. Marie best illustrates a(n) __________.
Marie, a pastry chef, wants to start a business with flexible working hours so that she can tend to other responsibilities at home. She decides to take orders over the phone and supply chocolates to various retail stores. Marie best illustrates a(n) __________.
Which countries abide by NAFTA?
Mexico, Canada, and the United States
Which of the following is a challenge of corporate social responsibility?
Modern business leaders balance their need to respond to investors and produce a profit with their desire to alleviate human suffering.
In 2008, the United States saw a decline in the GDP for two consecutive quarters, a rise in unemployment, and a decline in discretionary spending. All of these indicate that the United States was in which stage of the business cycle?
Recession
In this scenario, which of the following statements about the business is true?
Rob's business made a profit of $50,000 this year.
When people make decisions based on a particular situation instead of universal laws, it is referred to as ________.
Situational ethics
Perfect competition
__________ occurs when there are many buyers and sellers of products that are virtually identical, so no single supplier can influence the price.
Businesses
_____________ sell goods or services or both in order to earn a profit.
A franchise is a method of doing business in which ________.
a company's products or services are sold to independent third-party operators under the company's name PreviousNext
National Business
have several outlets throughout the country, but do not serve an international market.
How does profit differ from revenue?
revenue is the money a business takes in. Profit is the amount of money that is left after expenses.
Which of the following best describes a loss?
It occurs when ones expenses are greater than one's revenues.
Which of the following best describes ethical sourcing and procurement?
It refers to dealing fairly with one's suppliers, including those in third-world countries.
_______________ occurs when only two suppliers exist in a market.
A duopoly
Conducting a business within the boundaries of all laws that govern that industry is referred to as legal ________.
compliance
Business
entities that offer products to their customers to earn a profit.
Globalization
is a movement toward a more interconnected and interdependent world economy.
As the recession of 2008 became prevalent in the United States, the Fed used _____________ while the government used ________________ to help even out the swing of the business cycle.
monetary policy, fiscal policy
A(n) ____________ is a study of how well a company is meeting its social responsibilities.
social audit
In which of the following would someone studying microeconomics most likely be interested?
A review of a certain corporation's budget
Which of these programs is designed to increase the attentiveness of an organization's employees to ethics issues?
Ethics training program
Which of the following is true of small businesses?
They create more patents per employee than do large firms.
Under which act are CEOs required to validate their companies' financial statements and assure for their accuracy with the SEC?
The Sarbanes-Oxley Act
Regional Business
are companies that serve a wider area than local businesses but do not serve national or international markets.
Profit
are earned when a company's revenue is greater than its expenses.
Service
are intangible products that are bought or sold.
Goods
are physical products a business sells.
Expenses
are the money the business pays out.
An American executive who studies Italian before making a sales trip to Rome is showing consideration for ________.
language
Mary's business is an example of what type of business?
An e-commerce business
Which of the following statements best defines the term whistle-blower?
An employee or other person who reports misconduct, most often to an authority outside the firm
Roger, a new human resources manager, has been hired to ensure his firm's employees act ethically. What should Roger implement to make sure employees understand how to do this?
An ethics training program
Non-profit-organization
Are businesses that do not pursue profits but instead seek to service the community through social, educational, or political means.
Why might a person buy a franchise rather than start a business?
Because it's a proven system of operation
How can companies create new markets while acting ethically?
By examining the world with an eye toward social responsibility when developing products
Which of the following is the practice of donating some of a company's profits or resources to charitable organizations?
Corporate philanthropy
__________ is a constant decrease in prices over time.
Deflation
Which of the following is the first step in creating a personal code of ethics?
Determining your base character
__________ are programs for managing, retaining, and promoting different types of people in the workforce.
Diversity initiatives
Muttville rescues mature dogs, provides them with needed medical care and places them with families for adoption. Which of the following would best describe Muttville's product?
Dogs
Which of the following is the Federal Reserve unable to directly do?
Increase and decrease the interest rate in the economy by a certain percentage.
Which of the following best describes a local business?
It is usually one of a kind and serves a limited surrounding area.
The unemployment rate refers to which of the following?
The percentage of people in the U.S. economy who are 16 years of age or older who are not working but have tried to find jobs within the past 4 weeks
Which of the following products is counted as part of the U.S. gross domestic product (GDP)?
The value of a new automobile produced in the United States
Which of the following is true of gazelle companies?
These companies are created by growth entrepreneurs.
Which of the following is true of small businesses?
They are major employers.
How do companies conduct a social audit?
They conduct an internal systematic examination that measures and monitors the progress of the company in meeting its corporate social responsibility goals.
Which of the following is true of entrepreneurs?
They fill niches. They see problems to be solved or opportunities that aren't being addressed in the marketplace.
__________ invest in businesses as well as play an active role in managing them.
Venture capitalists
How is your life similar to a business?
You have to deal with globalization and new technology.
Diversity initiatives
__________ are programs for managing, retaining, and promoting different types of people in the workforce.
Undercapitalization
__________ is the lack of access a business owner has to adequate funds for the business.
When a company's expenses are greater than its revenues, the company typically experiences __________.
a loss
The cheap foreign labor argument for protectionism refers to ________.
a lower wage often earned by many foreign workers
Monopolistic competition is __________.
a situation in which many sellers differentiate their products from those of competitors in at least some small way and are therefore able to charge different prices for them
Patricia often acts without thinking of the consequences. She usually comes home late and even skips her turn to do household chores. When someone asks her if she thinks what she does is right or wrong, she says she doesn't really know and she doesn't really care. Patricia's behavior can be classified as ________.
amoral
Natural resource
are the raw materials provided by nature that are used to produce goods and services.
A(n) __________ is a limitation on the amount of an import allowed to enter a country.
quota
All of the following are reasons why people start small businesses EXCEPT ________.
reduced levels of responsibility
Aero, Inc. is a company that sells kitchenware to several countries around the world. Its products are basic in nature and are standardized so that they meet universal needs. The company does not customize its products for a particular market. What type of international business strategy is Aero using?
A global strategy
What type of entrepreneur is Grossman?
A social entrepreneur
Which of the following is a difference between a tariff and a subsidy?
A tariff is a tax imposed on an imported good or service, whereas a subsidy consists of government financial assistance to domestic producers.
__________ involves establishing a foreign facility owned entirely by an investing firm.
A wholly owned subsidiary
Which of the following is true of the global business environment?
Body language differs significantly from person to person and around the world.
________ is relatively easy and inexpensive compared with establishing a physical presence in a market, but it is not economical for heavy or bulky products with high transportation costs.
Exporting
Which of the following best describes an enterprise zone?
It is a geographic area targeted for economic revitalization based on various criteria, such as its population, poverty rates, and amount of economic stress it is experiencing.
Which of the following best describes crowdfunding?
It is a way to generate donations for a start-up from individuals on websites and social networks.
Which of the following best describes the Small Business Administration (SBA)?
It is an independent agency of the U.S. government that offers assistance to small businesses that meet certain criteria.
How do free trade agreements affect trade?
They result in a greater quantity and variety of products traded at lower prices.
When a wealthy individual invests his or her own money into a business project or start-up company with little intention to influence decision making, he or she is MOST often called a(n) ________.
angel investor
Which of the following BEST demonstrates that different countries have different attitudes toward work?
different vacation policies
A(n) __________ is an individual who assumes the risk of creating, organizing, and operating a business.
entrepreneur
The WTO has __________.
extended GATT rules to services and increased the protection for intellectual property rights
______ describes the act of reporting misconduct in the workplace to an authority outside the firm.
Whistle-blowing
An organization's mission statement answers which of these questions?
Why do we exist?
An oligopoly is __________.
a form of competition in which only a few sellers exist, each with a fairly large share of the market
How do competition, the social environment, globalization, and technological growth challenge and provide opportunities to business owners?
1. competition arises when two or more businesses contend to attract customers and gain an advantage over one another. Competition forces companies to improve their product offsprings, lower prices, aggressively promote their brand, and focus on customer satisfaction. 2. Social environmental encompasses demographic factors such as race, ethnicity, gender, age, income distribution, sexual orientation, and other characteristics. An aging population, increasing diversity, and the green movement both challenge and pose opportunities to business owners. 3. Globalization involves the merging of economies around the world as technology, goods and services, labor, and capital move back and forth across international borders. Although globalization provides profitable opportunities, such as increased markets and offsprings, it also leads to greater competition for US businesses and workers. 3. Technology items and services such as smartphones, computer software, and digital broadcasting make businesses more efficient and productive. E-commerce is well established and still growing. offering even small firms a chance to sell to a global market. At the same time, keeping up with the pace of technology is an expensive and time-consuming operation for many businesses.
You've made the decision to go global with your solar kits, and it appears that India presents the best potential market for your products. It's time to jump into the pool, but you need to decide whether you're going to jump into the shallow end or the deep end. (lowest level of involvement to highest)
C. Exporter/ Importer B. International firm A. Multinational firm
________ are the specific laws that govern the products and processes of an industry.
Legal regulations
Who argued that it makes no more sense to ask a corporation to be socially responsible than it does to ask a building to be?
Nobel Prize winner Milton Friedman
By acting ethically, many firms have created opportunities with new types of products and services. Which of the following is NOT one of these new types of products or services?
Offering bottled tap water
Provide an example of real capital?
Office building, factory.
__________ is/are the key instrument the Fed uses in its monetary policy; purchasing and selling U.S. Treasury and federal agency bonds on the open market.
Open market operations
______________ occurs when there are many buyers and sellers of products that are almost equal and any seller can easily enter and/or exit the market.
Perfect competition
Which term refers to the values that guide the decisions you make in your life?
Personal ethics
Which of the following is/are likely to have an adverse effect on international trade?
Political instability
Which term describes a decline in the GDP for two or more consecutive quarters?
Recession
Which of the following is NOT a disadvantage of franchising?
brand recognition
Over the past few decades, many cities, as well as developed and developing countries, have started public ________, often in conjunction with universities and research institutions, to promote new business development.
business incubators
International businesses prefer ________ economies to ________ economies because the bureaucratic hassles associated with government intervention drive costs up.
free market; state-run
Labor is a factor of production that refers to any physical or ________ work people contribute to a business's production.
intellectual
BanCorp changes its interest rates for consumer loans on houses and cars based on changes made by the Federal Reserve (the Fed). Those reviewing these changes would most likely be studying ________.
macroeconomics
Capitalism is an example of a __________ economy.
market
All of the industries and businesses in the country of Marksenia are privately owned and sell products at different prices that are not controlled by the government or any other organizational body. Consumers in Marksenia are free to buy as much of the products as they like from the businesses they want. The country of Marksenia has a ________.
market economy
Facebook is an example of a __________.
social network
Gawker Media cites different languages and cultures as the biggest barrier to being successful in foreign markets. These are examples of the ____________ environment?
sociocultural
U.S. importers prefer a(n) ________ dollar.
strong
Gawker Media has changed its product offering considerably in the Brazilian market because the percentage of smart phone users in this area is relatively low. This is an example of how Gawker Media is responding to the ______ environment.
technological
Jeremy is a telemarketer who is hearing impaired. His hearing aid helps him take calls at work and this compensates for his disability. He accidentally broke his hearing aid and did not have the money to replace it. He asked for an advance on salary and was refused. He asked for a loan and was refused. As a result, Jeremy was unable to take calls from customers and he was fired from his job because of "poor performance." Which government agency shall Jeremy call for help in this situation?
the Equal Employment Opportunity Commission
The interest rate Bank of America would charge Citibank when borrowing funds overnight is known as _______.
the federal funds rate
A statement of a company's pledge to certain ethical practices is known as __________.
A code of ethics
Which of the following is a coincident indicator that tracks the average change in prices at the wholesale level?
Producer price index
Which of the following is/are likely to impede globalization?
Sharply fluctuating exchange rates
ABC Manufacturing has recently revamped its business practices with a sincere focus on sustainability. Which of the following best describe ABC's focus on sustainability?
Going green
What are the 4 type of businesses?
1. A local business relies on local consumers to generate business. 2. Regional Businesses are companies that serve a wider area than local businesses but do not serve national or international markets. 3. A national business has several outlets throughout the country, but it does not serve an international market. It provides goods or services to all US residents, no matter where int he country they live. 4. Multinational enterprises also known as multination companies or corporations, multinational businesses, or international businesses, are companies that have operations in more than one country. They are among the leaders of a movement called globalization.
What are some of the benefits of business competition?
1. It benefits consumers because it motivates businesses to produce a wider variety of better and cheaper goods and services. 2. More companies are placing decision making responsibilies on employees, rather having decision trickle down through management. This also means greater employee satisfaction and more career advancement opportunities.
How do life skills translate to the business environment?
1. You have income, expenses, and profit. 2. You are affected by globalization and technology. You have concerns with security.
A __________ is usually one of a kind and serves a limited surrounding area.
A __________ is usually one of a kind and serves a limited surrounding area.
How do for-profit businesses and not-for-profit organizations compare?
A business is an entity that offers goods and services to its customers to earn a profit. A not-for-profit organization is an organization that does not pursue profits but instead seeks to service its community through social, educational, or political means.
Which of the following are substitute goods and/or services?
Bus service and taxi serviceBus service and taxi service
__________ sell goods or services or both in order to earn a profit.
Businesses
Which of the following shift(s) a supply curve for a product?
Changes in technology, resource prices, and future price expectations
Which of the following is NOT one of the five pillars of corporate social responsibility?
Company assets, funds, and records
Which term describes a company's duty to conduct its actions with the aim of attaining social, environmental, and economic development?
Corporate social responsibility
Which term describes a company's obligation to conduct its activities with the aim of achieving social, environmental, and economic development?
Corporate social responsibility
Which of the following represents coins and bills, traveler's checks, and checking accounts and constitutes as the narrowest measure of our money supply?
M-1
Your last challenge of the week may be your biggest yet. Matthew, the Vice President of Accounting, and Chris, the Director of Sales, meet with you in your office. Matthew begins the meeting. "Our quarterly earnings report is due by the end of the week, and the numbers don't look good. We're going to miss our earnings estimates, and this is going to have a huge impact on the value of our stock." Chris pipes up. "I've told Matthew that there's a simple solution. We just landed a huge contract with a new customer that's worth over $2 million. This is a sure thing, but the customer is out of the country and can't sign the contract until late next week. Why don't we just record those sales in this quarter? That way, we'll make our earnings estimate." Matthew is upset. "That's fraud." Chris appears unconcerned. "It's not fraud. We've got the contract. What's the difference if we record the sales in this quarter or next quarter? "
Don't record the sale because it's not a sure thing until the contract is signed. By recording future sales on the "promise" of a contract, you are misleading investors as to the financial state of the company.
Patagonia is involved in a campaign called "Freedom to Roam," which seeks to open up corridors for animals to roam. Which pillar of social responsibility does this campaign most likely represent?
Environmental, health, and safety concerns
A depreciation in the domestic currency does which of the following?
Makes imported goods more costly for domestic consumers
By acting ethically, many firms have created opportunities with new types of products and services. Which of the following is one of these new types of products or services?
Going global
Why is globalization a controversial subject for so many people?
Globalization presents both benefits and risks to the US economy. For example, lowered production costs allow prices on consumer product to decrease, meaning that consumer benefit by purchasing goods at lower prices but concern remains about workers int eh US who lose their jobs to workers overseas. Globalization poses other risks for US companies, including the following: 1. Increased competition from international companies. 2. Fluctuations in the value of the US dollar. 3. Security and patent protection concerns. 4. Unstable political climates in foreign countries.
What does it mean when a firm goes "green"?
It becomes eco-friendly.
Which of the following is true of a service?
It can't be physically handled.
Which of the following is true of situational ethics?
It challenges the idea that universal rules exist and can be applied to every situation.
Which of the following is true of situational ethics?
It has been the subject of controversy.
Which of the following best describes a business plan?
It is a document that states the goals of the business as well as the plan for reaching those goals.
Which of the following best describes an ethics training program?
It is a program a firm implements to boost awareness of ethical issues among its employees.
Which of the following best describes a social audit?
It is a study of how well a company is meeting its social responsibilities.
__________________ refer(s) to conducting a business within the boundaries of all the legal regulations of an industry.
Legal compliance
Which of the following refers to the particular laws governing the goods or processes of a specific industry?
Legal regulations
_______________ refer(s) to the particular laws governing the products or processes of a specific industry.
Legal regulations
Gawker Media developed localization partnerships with online media publishers in England, Australia and Japan. Gawker Media chose which type of globalization strategy?
Licensing
Which of the following is an agreement in which a firm's intangible property may be sold or made available to another firm for a fee?
Licensing
Foreign direct investment (FDI) and strategic alliances present the highest level of risk and investment for your business. A wiser choice at this stage of your business would be either using an independent agent to sell your domestically made products in India or a licensing arrangement in which you allow an Indian company to manufacture and market your products in India. Which of those options would you choose?
Licensing agreement (You chose licensing arrangement. This was a good choice, although it has a higher level of involvement on your company's part than utilizing an independent agent. A licensing arrangement is a contract under which you would allow a company in India to use your brand name, operating procedures, and proprietary technology. You would give this foreign company exclusive rights to manufacture or market your products in that market. In return, you would receive a fee plus ongoing payments (royalties) that are based on a percentage of the license holder's sales.)
Which of the following is the best example of entrepreneurship?
Lily, a grocery store owner, decides to open an online grocery store that gets orders through Facebook.
Muttville would best be described as which type of an organization?
Local
Which of the following has led to the rapid increase in globalization?
Lower trade barriers
Which term describes a situation where the supplier of a service or good has control of all or nearly all of its market?
Monopoly
Which term describes the viewpoint that argues that there is no universal moral truth; instead, there are only people's individual beliefs, perspectives, and values?
Moral relativism
__________ refers to moving production from a domestic site to a foreign location.
Offshoring
__________ is the process of working to improve quality of life in ways that simultaneously protect and enhance the earth's life support systems.
Sustainability
__________ poses the greatest threat of failure to a new company.
Poor fiscal management
Which of the following is lasting unemployment that takes place when an industry changes in such a way that those jobs are entirely ended?
Structural unemployment
Which of the following isn't likely to happen when the price of a product increases in the market?
Suppliers want to supply less of it.
Greensaver Corp. is a company that sells electricity. Greensaver has taken the initiative to generate more power from solar and wind sources and is planting saplings in parks and on roadsides to combat the polluting effects of nonrenewable resources. Which of the following best describes Greensaver Corp.'s efforts?
Sustainability
The practice of enhancing the quality of people's lives in ways that concurrently protect and enhance the earth's life support systems is known as ___________.
Sustainability
Which term describes the actions of a company that engages in enhancing the quality of people's lives while also protecting and enhancing the life support systems of the planet?
Sustainability
Later that day, the Director of Sales, Chris, calls you. "We have a problem. The folks in accounting did a random audit on expense accounts, and it turns out that there were some irregularities on Terry Stafford's expense account statement last month. She used a company credit card for several meals with clients during a business trip. That part's okay, but then she also submitted the receipts for reimbursement on her expense report. So, we paid the credit card bill and also reimbursed her for the meals on her expense report. She was double-dipping." You're perplexed. "Sounds like expense account fraud to me. What's the problem?" Chris goes on. "You know what company policy says -- expense account fraud is grounds for immediate dismissal." Now you're even more confused. "Okay, so she violated company policy, and the penalty is clear. I repeat: What's the problem?" There's a long pause before Chris continues. "She's my top performer. She's practically doubled sales in her territory. I can't afford to lose her. Can't we make an exception just this once?" As CEO, what should you do?
Terry must be fired immediately. Not only has she violated company policy, but this is a serious ethics violation, and it cannot and will not be tolerated.
Governments can affect international business in many ways. You've just seen how a government can make it difficult for foreign firms by enacting local content laws. But local content laws aren't the only way that governments can set conditions for doing business within their borders and even prohibit doing business altogether Subsidies are government payments to domestic producers to enable them to compete with foreign competitors. With a subsidy, a domestic producer can sell at a lower market price but still not lose money Tariffs are taxes on imports. These taxes make the imported good more expensive, giving a domestic producer a better chance at competing with the foreign producer. For example, India might impose a 15% tariff on imported solar kits. This would make your product more expensive for Indian consumers. Quotas put a physical limit on the quantity of a good that can be imported into a country in a given period of time. This leads to a reduction in the quantity imported and increases the market price, benefiting a domestic producer. Embargos are government orders forbidding exportation or importation of a particular product -- or even all products -- from a specific country. For example, in 2015 Russia placed an embargo on European pork over concerns about African swine fever in European wild boar. Business practice laws encompass the regulations, policies, and procedures through which host countries govern business practices in their jurisdiction. Governments can make it easy to do business internationally, or they can impose layer upon layer of bureaucracy and incomprehensible rules to restrain trade. Think you've got it?
Tariff - Japan announces an import tax of 15% on U.S.-made vehicles. - Every wristwatch imported into Mexico is subject to a tax of 45 pesos. Quota - Vietnam restricts the import of rice to 350,000 metric tons per year. - The U.S. allows the import of no more than 1.23 million tons of sugar each year. Embargo - Russia places a complete restriction on the importation of fish from Norway. Subsidy - The government of Haiti supplements the income of farmers of agricultural commodities such as wheat, grain, and cotton. Local Content Law - The Federal Highway Administration requires that steel and iron products used in highway construction projects must be sourced from U.S. companies. Business Practice Law - Companies wishing to import cheese into France must comply with lengthy customs procedures and provide additional trade documents such as Certificates of Origin and Certificates of Authenticity.
Which of the following is true of monopolies?
The U.S. Federal Trade Commission and the Department of Justice must review mergers between large competitors to determine whether the combined firm would result in a monopoly that would thwart competition.
On the basis of population, it would appear that India has the greatest potential for your solar kits. However, you realize that this is a huge decision, so you decide to do more research before finalizing your decision. Which of the following factors, if true, would make you less inclined to enter the Indian market?
The U.S. dollar has skyrocketed in value against the Indian Rupee. (You chose the skyrocketing U.S. dollar. That was the best choice. This isn't a good sign. If the U.S. dollar is strong relative to the Indian currency (the rupee), your solar kits will be more expensive for Indian consumers, which could negatively impact your sales.)
When you come into work on Tuesday, you check your email. You see that you have an email from the plant manager in Taiwan. Plant Manager Subject: Problem with Permit We have a serious problem here. We applied for a permit to expand the manufacturing facility several weeks ago. I called the Building Department to find out the status and was told that there is a problem with the paperwork, and they don't know when they will be able to issue the permit. It may be weeks, or even months. If we don't get this permit soon, the monsoon season will be here, and construction will be delayed until November. I spoke to one building inspector here, and he said he'd put a rush on the permit if we paid him $1,000. You know as well as I do that it's a bribe, but we need to get construction started. What do you want me to do? You know that the Foreign Corrupt Practices Act (FCPA) prohibits U.S. firms from paying bribes to foreign officials. But you need that permit or construction will be delayed for months. What are you going to do?
The law is the law. Tell your plant manager that he should not pay the bribe because it is against the law.
Gawker Media must be aware of and follow laws and regulations of the country in which it is doing business. These may include censorship and copyright laws. This area of environment is best known as which of the following?
The legal-regulatory environment
Which of the following is true of business incubators?
They offer administrative services, technical, and other support to start-up businesses.
What do entrepreneurs with little capital most often do to finance their businesses?'
They use bootstrap financing.
Which of the following is a goal of the World Trade Organization?
To help negotiate international trading disputes
Grossman most likely chose angel investors as his primary source of capital for the first ten years because ___________________.
angel investors don't usually seek to manage or control the businesses they are investing in
The Calvert Company assigns companies scores based on their performance in which of the following categories?
community relations
Multinational enterprises
companies that have operations in more than one country -are among the leaders of a movement called globalization.
Patagonia donates large sums of money to not-for-profit organizations to help restore and maintain the environment. These donations from the company are collectively known as ________.
corporate philanthropy
Prior to the 2008 recession, more people in the United States were in the market for houses. As a result, the prices of houses went up. The intersection of the supply and demand curves is known as the ________.
equilibrium price
The study of the general nature of morals and the particular moral principles that govern a person's behavior is known as _______.
ethics
Green Economy
factors ecological concerns into business decisions.
As it is for many organizations, for Muttville ________ is the most under-resourced factor of production?
financial capital
Increasing taxes is an example of the government using ________ to affect the economy.
fiscal policy
An economy in which individuals and businesses make decisions based on consumer needs and wants is a __________.
market economy
A(n) ______________ occurs when there are many purchasers and sellers and the goods are similar but not identical.
market under monopolistic competition
Goldfish is a very popular but rather small Chinese fast-food restaurant in Wisconsin. The people living in the neighborhood are loyal customers and appreciate the high standards of quality and service offered at the restaurant. On being asked if he had any plans on expanding his business, Ming Soon, the owner of Goldfish, replied that he had no such aspirations and was satisfied with the way things were. Ming Soon best exemplifies a __________.
micropreneur
A _____________ defines the core purpose of an organization and explains why it exists.
mission statement
Which term defines the core purpose an organization?
mission statement
Which term refers to the act of reporting misconduct in the workplace to an authority outside the firm?
Whistle-blowing
You've decided to launch an investigation into whether the allegations of child labor at Primo's factories are true. Your fact-finding team learns that children as young as 14 are working full time at the factories. However, workers in El Salvador are legally eligible to work full time at age 14, so the company is operating within the laws of that country. How will this information impact your decision on whether to pursue the joint venture? Everyone looks to you for a decision. What should you do?
-The law is the law. If Primo is abiding by the child labor laws of El Salvador, you will go ahead with the joint venture. -You will insist that Primo conforms to U.S. standards for wages, hours worked, and safety requirements for minors under age 18. If the company will not abide by U.S. standards, you will not go ahead with the joint venture. (This was an OK choice)
In China, there is a single provider of tobacco, China National Tobacco Corp.,that has control of all or nearly all of its market. This is an example of ______.
A monopoly
Chickee, a fast food restaurant chain that specializes in fried chicken, differentiates its food products by customizing them in order to meet the tastes and preferences of local customers. Which of the following strategies of international business does Chickee use?
A multidomestic strategy
Allstate Insurance is an example of what kind of a business?
A national business
Which of the following is true of the global business environment?
Aesthetics (what is believed to be in good taste and/or beautiful) differs significantly around the world.
Amal owns a food company. Recently she purchased a larger factory so she can increase the business's output. Purchasing the factory corresponds to which of the following factors of production?
Capital
Which term describes the temporary unemployment that results when workers move between jobs, careers, and locations?
Frictional unemployment
GATT stands for ________ on Tariffs and Trade.
General Agreement
Identify the correct statement about goods and services offered by businesses.
Goods are physical products, whereas services are intangible products.
_____ measures how productive a country is and the total market value of final products and services produced in that country in a year.
Gross domestic product
You're considering licensing your business to a firm in India. Which of the following factors would make you reconsider your decision?
India is ranked near the bottom of the World Bank's Doing Business report, which measures business regulations in areas such as starting a business, dealing with construction permits, getting electricity, registering property, and so on. (You chose India's low business ranking. This was the best choice. Layers of bureaucracy can suffocate a business venture with red tape, delays in getting permits, and cost overruns. Having a local licensee should help facilitate navigating through the processes, but it is still a consideration.)
Which of the following best describes an embargo?
It is a total restriction on an import or an export.
Which of the following describes undercapitalization?
It is the lack of access a business owner has to adequate funds for the business.
Which of the following best describes offshoring?
It is the process of relocating production facilities abroad or subcontracting at least some of the components of products to foreign companies around the world
What is economics?
It is the study of how individuals and businesses make decisions to best satisfy wants, needs, and desires with limited resources.
Which of the following is a concern with a communist system?
It tends to reduce people's motivation to work as hard as they might otherwise.
You've determined that India presents the greatest potential for your solar kits. Now it's time to decide the best approach for launching your solar kits internationally. You recognize that there are different types of organizational strategies available to you to introduce your solar kits in India. You want to go slowly and enter this new market with minimal risk and expense. Of the following, which approach will you use?
Licensing agreement
An appreciation in the domestic currency does which of the following?
Makes products exported from the domestic country more expensive for foreigners
Which of the following scenarios is an example of whistle-blowing?
Marco's notifying the U.S. Environmental Protection Agency that his firm is dumping toxic chemicals into a nearby river
Nail salons and pizza parlors exemplify what type of competition?
Monopolistic competition
The next day, you meet with Tonya, the Director of Marketing, and Jackson, the Director of Research and Development. It's obvious from the moment they step into your office that there is tension between them. Before they even sit down, Jackson starts in: "We've got a problem with our preschool building blocks," he says. "As you know, we treated those blocks with an antibacterial agent and it was supposed to stop bacteria. But we've been running more tests, and it looks like that's not entirely true. It doesn't stop bacteria; it just slows down the growth." You shrug. "Okay, so what's the problem?" Jackson goes on. "The problem is the ad campaign that the geniuses in marketing came up with. Their ads claim that it 'stops bacteria in its tracks' and that's just not true. It's even on the packaging." Tonya speaks up. "Look, that's the mainstay of our promotional campaign, and sales of those blocks have gone through the roof since we started running those ads. That campaign has cost the company thousands of dollars, and if you change the packaging, that'll cost a fortune. I think we're nitpicking here." Jackson responds hotly, "I don't consider false advertising to be nitpicking." As CEO, what should you do?
Order another set of tests from an independent testing lab to determine the validity of the test results before making a decision. -Withdraw the ad campaign immediately and pull the product from store shelves so you can change the packaging to eliminate the claim about stopping bacteria. Do nothing. The antibacterial agent may not stop bacteria, but it slows its growth. You're not selling surgical equipment. (This was an OK choice)
Your licensee has set up operations in India, and soon he sends you an email. From: M. Patel Subject: Order We need to place a large order for bulbs for our solar kit. As you know, we purchase these bulbs from a supplier in the U.S. I have been watching the exchange rate between the U.S. dollar and the Indian rupee very carefully. The current exchange rate is $1 to 66.96 rupees. However, sources tell me that the exchange rate is expected to be $1 to 58.40 very soon. Please advise if you want me to place the order now or if you want me to wait until the anticipated change in the exchange rate takes place. I look forward to your prompt direction. What will you tell your licensee to do?
Place the order now. (The price of the bulbs will increase if the exchange rate changes as anticipated, so he should place the order now. Let's assume that the bulbs now cost 890 rupees. At an exchange rate of $1 to 66.96 rupees, the bulbs cost $13.29 each (890 ÷ 66.96). However, if the exchange rate changes as expected, those same bulbs will cost $15.24 (890 ÷ 58.40). Buy now, before the price goes up!)
Your first meeting on Monday is with the Director of Public Relations (Elena), the Vice President of Strategic Development (Martha), and the Director of Manufacturing (Jack). "Bad news about our joint venture negotiations with Primo Products in El Salvador," says Elena. "I've just become aware of some media reports about possible child labor in some of their factories. The fall-out from this could be serious. Our reputation could be on the line. We can't be associated with a company that uses child labor." Martha speaks up. "Not so fast! This joint venture is critical for our company. This could open up the Latin American market for our products, and it's likely to be extremely profitable for both our company and Primo. We need this deal, and we need it fast." Jack agrees. "Let's face it. This goes on all the time. It's a different culture over there. We don't even know if these reports are true, but even if they are, you know how the media is. It'll be headlines for a day and then the next big story will hit and everyone will forget about it. I say we move forward with this." Everyone looks to you for a decision. What should you do?
Put the joint venture on hold until you can investigate whether the allegations are true.
Which of the following statements about the business is true?
Rob's business had a loss of $25,000 last year.
Rajiv Rob owns a business that sells customized snowboards to professional athletes. This year his business costs were $225,000, and his revenues were $275,000.
Rob's business made a profit of $50,000 this year
Which of the following is the Federal Reserve unable to do?
Set the federal funds rate.
World Café believes in helping save the environment, so it has instituted recycling efforts for its customers at all of its locations, using recycled biodegradable paper products, and also encouraging customers to bring their coffee/tea cups and reusable takeout food containers from home. Which of the following best describe World Café's effort?
Sustainability
Now that you're actively involved in international markets, you check the currency exchange rates on a daily basis. On Tuesday, the exchange rate between the dollar and the Indian rupee was $1 to 66.76 rupees. Today, the rate is $1 to 68.79 rupees. Is the dollar strengthening or weakening against the rupee?
The dollar is strengthening against the rupee. (A weakening dollar means that the U.S. dollar has fallen in value compared to the rupee -- in other words, the U.S. dollar buys less of the other currency. If the U.S. dollar could buy 66.76 rupees on Tuesday and it can buy 68.79 rupees today, the U.S. dollar is strengthening)
What are the factor of production?
The factor of production are the resources used to create goods and services. The factors of production include labor, natural resources, capital, intellectual property, entrepreneurial talent and technology.
How are baby boomers affecting society and business?
Their large numbers have made them a lucrative target for businesses, which are adjusting their strategies to increase their sales to people in this generation.
Which of the following is a concern with a communist system?
There are few opportunities for entrepreneurship.
Which of the following is NOT true of small businesses, such as Wild Planet?
There are fewer small businesses in the United States than big businesses.
Which of the following scenarios illustrates the concept of a joint venture?
Trident Motors, Inc., a U.S.-based company, joined forces with Icon Automobiles, Inc., an Indian automobile manufacturer, to create a new business that involved shared possession and control.
Which term refers to a behavior that does not follow to a set of accepted standards of social or professional behavior?
Unethical behavior
Offshoring
__________ is the process of relocating production facilities abroad or subcontracting at least some of the components of products to foreign companies around the world.
A national business
__________ services an entire country but no other countries.
Ethnocentrism can be described as __________.
a belief that one's own culture is superior to all other cultures
A code of ethics is also referred to as ________.
a code of conduct
When a company's revenue is greater than its expenses, the company typically experiences __________.
a profit
Wild Planet relied on ___________ to finance the company for the first ten years.
angel investors
A____________ is a statement of a company's pledge to certain ethical practices.
code of ethics
Corporate social responsibility can be defined as a company's obligation to ________.
conduct its activities with the aim of achieving social, environmental, and economic development
A toy company regularly donates some of its profits to charitable organizations. This company is exercising ________.
corporate philanthropy
Swirl Corporation supplements its donations to education with a variety of programs designed to help at-risk children in the community. It supports underprivileged children and provides them with basic amenities to help improve their education. This initiative by Swirl Corporation is an example of __________.
corporate philanthropy
Sherri, the founder or Muttville, would best be described as a(n) ______________.
entrepreneur
A(n) ________ business is one that has at least 20 percent sales growth per year for five years, starting with a base revenue of at least $100,000.
gazelle
A company using a ____________ strategy sells standardized products around the globe.
global
Nebulous Works, a software manufacturing company, encourages its employees to generate ideas for the development of new software applications. The best ideas are selected and worked upon for the generation of new products in the future. The employees who contribute ideas that will enhance the company's existing products are __________.
intrapreneurs
Intellectual property
is a creation of the mind, such as an idea, invention, literary or other artistic work.
Financial capital
is money used to facilitate a business enterprise.
Entrepreneur
is someone who assumes the risk of creating, organizing, and operating a business and directs all of a business's resources.
Offshoring
is when businesses relocate their production facilities overseas or subcontract at least some of the components of their products to foreign companies around the world to achieve lower manufacturing costs.
Telecommute
is work from home or another location away from the office.
Patagonia's core purpose is to "build the best product while causing no unnecessary harm and inspire and implement solutions to the environmental crisis." This statement of core purpose is known as the company's ________.
mission statement
According to __________, each person has his or her own ideas of right and wrong, so no one should judge anyone else.
moral relativism
Gawker Media chose to change its product slightly to meet the needs of local markets. This indicates that Gawker Media is using a ________strategy.
multidomestic
Because the profits of Muttville are used to further its cause, Muttville is considered to be a(n) __________.
not-for-profit organization
Undercapitalization
occurs when a business owner cannot gain access to adequate funding.
A term that describes the movement of production away from a domestic production site to a foreign location is ________ outsourcing.
offshore
A(n) _______ is a form of competition where only a limited number of sellers exist, each with a fairly large share of the market.
oligopoly
A(n) ________ offers the company expertise that a new business owner does not possess in exchange for a share in its profits and liabilities.
partner
A ___________ occurs when an economic growth is at its most robust point.
peak
Yvon Chouinard founded Patagonia in the 1970s based on his _________________, which is defined as the principles that help to guide a person's behavior.
personal ethics
Sobadia Singh buys a new smartphone that stops working after 6 months and does not have a warranty. She's not happy about it and lets her followers on Twitter know about it. Sobadia is exhibiting her __________ as a consumer.
right to be heard
To keep the practices of Patagonia in line with their corporate social responsibility, the managers most likely perform an internal and systematic examination that measures and monitors what goals they have set, what progress they have made, and how resources, such as funding and labor, have been applied to the CSR goals. When Patagonia does this, it is most likely performing a(n) _______________ audit.
social
Facebook is an example of a ______________.
social network
A(n) __________ is government-provided financial assistance to domestic producers to help them compete against foreign producers.
subsidy
If the value of the nation of Nu's exports is greater than the value of its imports, Nu has a trade ________.
surplus
If the nation of Epsilon places a tax on all grapes imported from the nation of Zeta, Epsilon has imposed a(n) ________.
tariff
Keisha is thinking about starting her own software development company. Having a business plan will help Keisha __________.
think through some of the more difficult aspects of the business up front
If you are planning to start a new business, how long should you realistically expect it to take for your business to earn a profit?
three to five years
A _______ occurs when the recession hits bottom.
trough
The Service Corps of Retired Executives is composed of ________ who can provide advice to small business owners.
volunteers
