Business Essentials, 13th Edition Ronald J. Ebert Test Bank.pdf (12)

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Test Bank

Resource:

Business Essentials

Edition: Author(s):

13th Edition Ronald J. Ebert Ricky W. Griffin

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Business Essentials, 13e (Ebert/Griffin) Chapter The U.S.1Business Environment 1) Which of the following best describes profit?

A) Total money taken in by a corporation B) Increases in income from year to year C) Increases in a corporation's stock price D) Revenue generated by goods and services E) Difference between revenues and expenses Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

2) Which of the following is defined as the environment where a firm conducts its operations and derives its revenues known as?

A) Global business environment B) Economic environment C) Domestic business environment D) Technological environment E) Political-legal environment Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

3) Factors such as international trade agreements, economic conditions, and political unrest will have the greatest impact on which type of business environment?

A) Global business environment B) Economic environment C) Domestic business environment D) Technological environment E) Political-legal environment Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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4) Changes in which type of business environment can reduce or replace the need for traditional working methods, physical equipment, and other platforms needed to conduct business? A) Global business environment B) Economic environment C) Domestic business environment D) Technological environment E) Political-legal environment Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 5) As a teenager, Melinda started cutting grass for her neighbor. She did a good job, and more and more neighbors began to hire her. After saving money and investing in additional equipment, Melinda began to earn an even greater profit. Which of the following did Melinda create when she began cutting her neighbor's yard and earning income? A) Nonprofit B) Corporate culture C) Market economy D) Monopolistic competition E) Business Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 6) In which way does consumer choice and demand affect the way a business operates? A) Businesses must take into account what consumers want or need. B) Businesses must produce most of the goods and services we consume. C) Businesses must find opportunity and develop a plan to capitalize on it. D) Business must prepare to compete in the global marketplace. E) Business must use technology to track changing demographics in the community. Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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7) Which of the following consists of everything outside an organization's boundaries that might affect how the business operates?

A) Opportunities and enterprise B) Corporate culture C) External environment D) Domestic business environment E) Political-legal environment Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

8) Aimee wants to open her retail shop in her local community so that she can establish strong relationships with suppliers and customers, and distinguish herself and her shop from the competition. In which environment does Aimee wish to do business?

A) Global B) Political-legal C) Domestic D) Economic E) Technological Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

9) The Basic Broom Company orders much of its raw material from overseas markets, even though the product is made locally. Which of the following business environments might prevent The Basic Broom Company from being able to get its supply of raw material when they need it?

A) Changes in the global business environment B) Changes in the technological environment C) Changes in the economic environment D) Changes in the factors of production E) Changes in the labor force Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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10) Which of the following includes all the ways a firm creates value for their customers?

A) Technological environment B) Profitability C) Economic environment D) Creation of a market economy E) Law of supply and demand Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

11) Sally's Supply shop has recently had to change her process for shipping supplies because of changes in government regulations. She now also has to change how she reports profit and loss, and when those reports are processed. Which of the following is forcing these changes for Sally's Supply shop A) The laws of supply and demand B) Political-legal environment C) The establishment of perfect competition D) Changes in the market economy E) Economic environment Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

12) A new restaurant recently opened in the local community. It serves a variety of ethnic foods, and plays background music in keeping with the customers and values of the local demographics make up of the community. Which external environment of business is this restaurant considering when they support the customs, values, and demographics of the local community?

A) Monopoly B) Sociocultural C) Freedom of choice D) Perfect competition E) Global Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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13) Which of the following include relevant conditions that exist such as wage rates, number of people looking for jobs, and competition?

A) Global business environment B) Technological environment C) Political-legal environment D) Sociocultural environment E) Economic environment Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

14) Which of the following business environments includes the customers, mores, values, and demographic characteristics of the society where the organization functions?

A) Sociocultural B) Technological C) Political-legal D) Fiscal E) Economic Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

15) The pursuit of profits is how a business differs from organizations such as public universities, public hospitals, and government agencies.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

16) An organization's external environment consists of everything outside of the organization that might affect it.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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17) Businesses improve society by improving the quality of life in a society.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

18) The environment, not economic forces, play a major role in the success and failure of businesses everywhere.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

19) The customs, values, and demographic characteristics of the society in which an organization functions are the principal elements of the political-legal environment.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

20) The technological environment includes only electronics and telecommunications used to perform business activities.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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21) Compare a sociocultural environment to an economic environment.

Answer: The sociocultural environment includes the customs, mores, values, and demographic characteristics of the society in which an organization functions. Sociocultural processes also determine the goods and services, as well as the standards of business conduct, that a society is likely to value and accept. The economic environment refers to relevant conditions that exist in the economic system in which a company operates. For example, if an economy is doing well enough that most people have jobs and wages are high, a growing company may find it necessary to pay even higher wages and offer more benefits to attract workers from other companies. But if many people in an economy are looking for jobs, a firm may be able to pay less and offer fewer benefits.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

22) Describe the domestic business environment.

Answer: The domestic business environment refers to the environment in which a firm conducts its operations and derives its revenues. In general, businesses seek to be close to their customers, to establish strong relationships with their suppliers, and to distinguish themselves from their competitors.

Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

23) How do consumer choice and demand affect a capitalistic system?

Answer: In a capitalistic system, such as that in the United States, businesses exist to earn profits for owners. Within certain broad constraints, an owner is free to set up a new business, grow that business, sell it, or even shut it down. But consumers also have freedom of choice. In choosing how to pursue profits, businesses must take into account what consumers want or need.

No matter how efficient a business is, it won't survive if there is no demand for its goods or services.

Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations.

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24) What are the benefits of business for society? Answer: Businesses produce most of the goods and services we consume, and they employ most working people. They create most innovations and provide a vast range of opportunities for new businesses, which serve as their suppliers. A healthy business climate also contributes to the quality of life and standard of living of people in a society. Business profits enhance the personal incomes of millions of owners and stockholders, and business taxes help to support governments at all levels. Many businesses support charities and provide community leadership. Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.1: Define the nature of U.S. business, describe the external environments of business, and discuss how these environments affect the success or failure of organizations. 25) What is the general term for resources used by a business to produce a good or service referred to as? A) Labor B) Human Resources C) Human capital D) Factors of production E) Economic systems Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 26) Which of the following denotes a nation's basis for allocating its resources among its citizens? A) Capital structure B) Economic system C) Ownership processes D) Distribution network E) National regulations Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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27) Which of the following is the process for converting government enterprises into individually owned firms?

A) Production allocation B) Privatization C) Entrepreneurship D) Demand assessment E) Profit maximization Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

28) Which is the term for the physical and intellectual contributions of people while engaged in the production of goods and services?

A) Human resources B) Working capital C) Physical resources D) Planned resources E) Market resources Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

29) Who is described as the person who accepts the risks and opportunities inherent in a new business opportunity?

A) Capital managers B) Entrepreneurs C) Human resources D) Home country economic systems managers E) Information technology managers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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30) What factor of production is used to generate forecasts based on specialized knowledge and economic data?

A) Economic resources B) Labor C) Information resources D) Entrepreneurs E) Physical resources Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

31) When making decisions about production and allocation, which type of system depends on individual producers and consumers to create a combination of supply and demand?

A) Planned economy B) Communism C) Private economy D) Market economy E) Socialism Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

32) The idea that individuals would contribute according to their abilities and receive benefits according to their needs supports which type of economy?

A) Market economy B) Socialist based economy C) Mixed market economy D) Capitalist market economy E) Communist based economy Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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33) Which type of economy is the United States reflective of? A) Planned B) Mixed C) Market D) Private E) Socialist Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 34) What does a planned economy rely on a centralized government to do?

A) Support free enterprise in every way possible B) Determine how to allocate all or most factors of production C) Encourage citizens to buy shares of stock in small companies D) Keep its control activities to a minimum E) Direct workers to start their own small businesses Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 35) Which economic system emphasizes the private ownership of most factors of production? A) Socialism B) Communism C) Capitalism D) Marxism E) Federalism Answer: C Difficulty: Easy AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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36) In which type of economy do the individual producer and consumer control production through supply and demand?

A) Planned B) Communist C) Market D) Socialist E) Mixed Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

37) Which of the following marks the key difference between economic systems?

A) The way the factors of production are managed B) The way goods are transported within their borders C) The way rules and regulations are legislated D) The way workers are relocated to different regions E) The way basic necessities are determined Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

38) Which of the following represents the financial resources needed to operate a business?

A) Factors of production B) Savings C) Economy D) Supply and demand E) Capital Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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39) Kathleen has ordered new computers and office equipment of her tax preparation business. She is also considered renting a larger office for next year? Which of the following refer to the tangible things that Kathleen needs and uses to operate her business. A) Technological environment B) Private property C) Business cycle D) Physical resources E) Capital Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 40) Which of the following refers to a reliance on a centralized government to allocate most factors of production? A) Market economy B) Global business environment C) Information resources D) Planned economy E) Sociocultural environment Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 41) Which of the following do most countries rely on in terms of economic systems? A) Mixed market economy B) Privatization C) Market economies D) Capitalism E) Communism Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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42) Which of the following is a mechanism for exchange between buyers and sellers of specific goods or services? A) Market B) Entrepreneurship C) Communism D) Capitalism E) Free enterprise Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 43) Which of the following does a market economy depend on? A) Profits B) Freedom of choice C) Economic restrictions D) Competition E) Privatization Answer: B Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production. 44) Which of the following is the economic basis of the market process? A) Profit and loss B) Supply and demand C) Planned and market economies D) Labor and capital E) Physical and technological resources Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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45) Which of the following is the underlying premise of a market economy?

A) A matured society B) Direct ownership of factors of production C) Creation of shared value D) Centralized government E) A political basis of the market process Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

46) Which of the following is the political basis of the market economy process?

A) Communism B) Socialism C) Capitalism D) Planned economic support E) Centralized governments Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

47) In which planned economic systems does the government own and operate selected major industries and sources of production?

A) Mixed B) Privatization C) Socialism D) Communism E) Capitalism Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

48) Physical resources include the data and other information used by businesses.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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49) One major difference between economic systems is the way in which a system manages its factor of production.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

50) In a market system, individuals free to choose what they buy and how they can spend their money.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

51) China functions as a communistic economy and political system.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

52) In a market economy, there is a centralized government that controls factors of production and decision making.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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53) Discuss the two forms of planned economies and give examples of each.

Answer: There are two basic forms of planned economies: communism and socialism.

Communism is a system in which the government owns and operates all factors of production.

Under such a system, the government would assign people to jobs. It would also own all business and control business decisions–what to make, how much to charge, and so forth. Marx proposed that individuals would contribute according to their abilities and receive benefits according to their needs. He also expected government ownership of production factors to be temporary. Once society had matured, government would wither away, and workers would take direct ownership of the factors of production. Today, North Korea, Vietnam, Laos, Cuba and the People's Republic of China are the only nations remaining that are controlled with openly communist systems parties. In the partially planned system called socialism, the government owns and operates selected major industries. In such mixed market economies, the government may control banking, transportation, or industries producing basic goods such as oil and steel. Smaller businesses, such as clothing stores and restaurants are privately owned. Many Western European countries, including England and France, allow free market operations in most economic areas but keep government control of others, such as health care.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

54) Describe the role of information resources in business.

Answer: The production of tangible goods once dominated most economic systems. Today, information resources, data and other information used by businesses play a major role.

Information resources that businesses rely on include market forecasts, the specialized knowledge of people, and economic data. In turn, much of what businesses do with the information results either in the creation of new information or the repackaging of existing information for new users.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

55) Compare a planned economy to a market economy.

Answer: Economic systems also differ in the ways decisions are made about production and allocation. A planned economy relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions. In a market economy, individual producers and consumers control production and allocation by creating combinations of supply and demand.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

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56) Identify the five factors of production and their role in economic systems.

Answer: An economic system is a nation's system for allocating its resources among its citizens, both individuals and organizations. A basic difference between economic systems is the way in which a system manages its factors of production, the resources that a country's businesses use to produce goods and services. Economists have long focused on four factors of production: labor, capital, entrepreneurs, and physical resources. In addition to these traditional four factors, many economists now include information resources. People who work for businesses provide labor. Labor, sometimes called human resources or human capital, includes the physical and intellectual contributions people make while engaged in economic production.

Capital includes the financial resources needed to operate a business. An entrepreneur is a person who accepts the risks and opportunities entailed in creating and operating a new business.

Physical resources are the tangible things that organizations use to conduct their business. They include natural resources and raw materials, offices, storage and production facilities, parts and supplies, computers and peripherals, and a variety of other equipment.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Synthesis LO: 1.2: Describe the different types of global economic systems according to the means by which they control the factors of production.

57) What is the point at which the supply curve and the demand curve intersect on a graph?

A) Equilibrium price B) Decision point C) Surplus price D) Perfect price E) Parity point Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

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58) When demand and supply curves are plotted on the same graph, at which point will they intersect?

A) The going rate B) The margin rate C) The market price D) The optimum price E) The cost price Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

59) Which of the following occurs when the quantity demanded exceeds the quantity supplied?

A) Demand deficit B) Surplus C) Equilibrium point D) Shortage E) Price drop Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

60) On an economic level, what are the primary force that determines what a firm buys and sells?

A) Laws of supply and demand B) The demand and supply schedule C) Economic resources D) Equilibrium price E) The private enterprise system Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

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61) Which of the following is the willingness and ability of producers to offer a good for sale referred to as?

A) Competition B) Supply C) Planned economy D) Equilibrium E) Demand Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

62) Which of the following is proven when buyers purchase more of a product when the price drops and less when the price increases?

A) Equilibrium B) Law of supply C) Law of demand D) Degree of competition E) Free market economy Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

63) What can be used to determine relationships among different levels of demand and supply, based on price?

A) Market economies B) Degrees of competition C) Surplus to shortage relationships D) Demand and supply curves E) Private enterprise competition Answer: D Difficulty: Easy AACSB: Analytical thinking, Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

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64) What is the basis for a market economy? A) The ability to pursue an interest with minimal government restriction B) The ability to limit profits on competitors based on government restriction C) The ability to offer a good or service at a variety of price points D) A limitation on the number of competitors the government will allow within a specific geographic region E) The ability of a large number of smaller firms in an industry will limit influence Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 65) Which of the following represents the ownership of resources used in a private enterprise system? A) Freedom of choice B) Private property rights C) Increased profits D) Limited competition E) Perfect competition Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 66) Which of the following would lead some to become an entrepreneur and influence the choice of goods or services to produce? A) Competition B) Profit C) Degrees of competition D) Government regulation E) Monopolistic competition Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

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67) What is needed to gain a competitive advantage over competitors? A) The ability to produce goods and services and sell those at a fixed profit B) The ability to produce goods and services and sell those at a small profit C) The ability to produce goods or services efficiently and sell those at a reasonable profit D) The ability to leverage the internet to sell in a global marketplace E) The ability to have a good or service that can be easily duplicated by competitors Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

68) When there are many small firms in a specific industry, what is likely to occur? A) Competitive advantage B) An oligopoly C) Private enterprise D) Perfect competition E) Market force reliability Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 69) What is created when one company can most efficiently supply all the goods or services needed by the marketplace? A) Communism B) Natural monopolies C) Marketplace shifts D) Monopolistic competition E) Oligopolies Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

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70) Which of the following is one of the elements required in private enterprise?

A) Adequate representation in the government B) Freedom from foreign competition C) The opportunity for market leadership D) The right to ownership of property E) Numerous regulatory agencies Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

71) In perfect competition, which of the following conditions must prevail?

A) All firms must adhere to cost and pricing standards.

B) The number of firms in the industry must be limited.

C) A single firm is able to influence the price of its product.

D) It is relatively difficult to enter the industry.

E) All firms in a given industry must be small.

Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

72) In an oligopoly, when one firm reduces its prices, how do other sellers react?

A) There is no reaction from other firms to change their prices.

B) Other firms reduce their prices also, usually quite quickly.

C) Other firms may reduce their prices, but usually gradually.

D) Other firms are not usually aware that price has changed.

E) There is a combined response from other firms to stabilize prices.

Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

23 .

73) What is the term used to describe a market condition where buyers are able to satisfy the demand of the consumer, yet have some product remain unsold?

A) Surplus B) Stoppage C) Shortage D) Demand deficit E) Equilibrium price Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

74) When a new product has high demand in the market, how should a company react?

A) Increase the supply of the product B) Decrease the supply of the product C) Reduce the price of the product D) Maintain the current supply until demand falls E) Create an artificial shortage of the product Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

75) Mario's Pizza is a very successful pizza shop just off campus. Mario has noticed that as soon as the fall semester starts, he sells twice as many pizzas as he does during summer months.

Which aspect of a market economy is Mario experiencing?

A) Demand B) Choice C) Supply D) Competition E) Private enterprise Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

24 .

76) Tommey started his own t-shirt shop, and sold his shirts for low, very competitive prices. As his products became well-known he began selling them out of the local area, and on-line. Based on the Law of supply, what will likely happen to the prices that Tommey charges for his t-shirts?

A) Prices will rise B) Prices will fall C) Prices will stay the same D) Prices will fluctuate depending on where the shirts are sold E) Prices will decrease only on those sold online Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

77) The principle that says producers will offer more of a product for sale as its price rises, and less as its price drops is referred to as ________.

A) the law of demand B) equilibrium C) market pricing D) freedom of choice E) the law of supply Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

78) In which way can a producer of a product assess the relationship among different levels of demand and supply, at different price levels?

A) Demand curves B) Competition in the market C) Aggregate output D) Demand and supply schedules E) Gross domestic product Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

25 .

79) Which of the following will show how many units of a product should be supplied at different prices? A) Demand curve B) Parity C) Supply curve D) Productivity E) Aggregate output Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 80) Which of the following occurs when two or more business compete for the same resources or customers? A) Shortage B) Competition C) Demand fluctuation D) Perfect competition E) Decreased aggregate output Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 81) In which form of competition are prices set exclusively by supply and demand, and accepted by both sellers and buyers? A) Monopolistic competition B) Balance of trade C) Economic stability D) Purchasing power parity E) Perfect competition Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

26 .

82) In an effort to distinguish themselves from competitors, Healthy Gym began offering fitness classes designed for retirees in the morning, and high energy cycling classes during evening hours. Which degree of competition, which includes a large number of buyers and sellers, does Healthy Gym compete in?

A) Monopolistic competition B) Perfect C) Oligopoly D) Monopoly E) Natural monopoly Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

83) Which type of competition includes relatively few but large sellers who have the power to influence the prices of their products and significantly affect the sales of every other firm in the industry?

A) Perfect competition B) Parity C) Balance of trade D) Natural monopoly E) Oligopoly Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

84) The laws of supply and demand determine decisions about what to buy and sell.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

27 .

85) Economic systems differ in how factors of production are used.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

86) The point at which the supply curve and the demand curve intersect is the market price.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

87) One of the four elements that are necessary for private enterprise to be carried out is reasonable prices.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

88) Product differentiation is common in a market characterized by monopolistic competition.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

89) In a natural monopoly, prices tend to be government regulated.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

28 .

90) What is function of the laws of demand and supply?

Answer: On all economic levels, decisions about what to buy and what to sell are determined primarily by the forces of demand and supply. Demand is the willingness and ability of buyers to purchase a product (a good or a service). The law of Demand says buyers will purchase (demand) more of a product as its price drops and less as its price increases Supply is the willingness and ability of producers to offer a good or service for sale.

The law of supply says producers will offer (supply) more of a product for sale as its price rises and less of a product as its price drops.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Synthesis LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

91) What is required for perfect competition to exist, and what principles must be in place to achieve those conditions?

Answer: For perfect competition to exist, two conditions must prevail: (1) all firms in an industry must be small, and (2) the number of firms in the industry must be large. Under these conditions, no single firm is powerful enough to influence the price of its product. Prices are, therefore, determined by such market forces as supply and demand. There are four principles that support the two conditions. The products of each firm are so similar that buyers view them as identical to those of other firms. Both buyers and sellers know the prices that others are paying and receiving in the marketplace. Because each firm is small, it is easy for firms to enter or leave the market. Going prices are set exclusively by supply and demand and accepted by both sellers and buyers.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Synthesis LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

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92) Discuss each of the four principles of private enterprise systems. Answer: Market economies rely on a private enterprise system–one that allows individuals to pursue their own interests with minimal government restriction. In turn, private enterprise requires the presence of four elements: private property rights, freedom of choice, profits, and competition. Ownership of the resources used to create wealth is in the hands of individuals. You can sell your labor to any employer you choose. You can also choose which products to buy, and producers can choose whom to hire and what to produce. The lure of profits (and freedom) leads some people to abandon the security of working for someone else and to assume the risks of entrepreneurship. Anticipated profits also influence individuals' choices of which goods or services to produce. If profits motivate individuals to start a business, competition motivates them to operate those businesses efficiently.

Competition occurs when two or more businesses vie for the same resources or customers.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Synthesis LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 93) How can price be best determined? Answer: The demand and supply schedule can be used to construct demand and supply curves. A demand curve shows how many products will be demanded at different prices. A supply curve shows how many of the items will be supplied at different prices. Demand increases as price decreases; supply increases as price increases. When demand and supply curves are plotted on the same graph, the point at which they intersect is the market price (also called the equilibrium price), the price at which the quantity of goods demanded and the quantity of goods supplied are equal. Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

30 .

94) Explain the concept of mixed market economies and how they support pure planned and pure market economies.

Answer: In reality, there are really no "pure" planned or "pure" market economies. Most countries rely on some form of mixed market economy that features characteristics of both planned and market economies. Even a market economy that strives to be as free and open as possible, such as the U.S. economy, restricts certain activities. Some products can't be sold legally, others can be sold only to people of a certain age, advertising must be truthful, and so forth. The People's Republic of China, the world's most important planned economy, is increasingly allowing private ownership and entrepreneurship (although with government oversight). When a government is making a change from a planned economy to a market economy, it usually begins to adopt market mechanisms through privatization, the process of converting government enterprises into privately owned companies.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.3: Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system.

95) Which of the following offers expert statistical information on the strength and performance of an economy?

A) Market price reports B) Supply curves C) Economic indicators D) Demand Curves E) Degrees of competition reports Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

96) The total value of all goods and services produced by a country within a given period is measured through what?

A) Standard of living B) Aggregate output C) Gross national product D) Output per capita E) Inflation rates Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

31 .

97) What term do economists use for the pattern of short-term expansions and contractions in the economy?

A) Business cycle B) Aggregate output C) Standard of living D) Consumer price index E) Purchasing power parity Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

98) Which indicator refers to the total quantity of goods and services produced by an economic system during a given period?

A) The business cycle B) Aggregate output C) Gross domestic product D) The consumer price index E) Gross national product Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

99) Which type of government based economic policy includes both fiscal and monetary policy?

A) Trade B) Employment C) Stabilization D) Tax E) Foreign Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

32 .

100) How would supply affect the aggregate output of an economy?

A) Supply would decrease aggregate output B) Increases in both would cause inflation C) Aggregate output would grow as supply grows D) Supply would have no direct effect on aggregate output E) Aggregate output would increase the money supply Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

101) Which of the following BEST describes what the consumer price index is used to indicate?

A) The average wage rate for a given region B) The economic performance of key consumer product companies C) The changes in the cost of consumer products over time D) The percentage of consumers in the total population looking for work E) The number of price increases within a given period of time Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

102) Which of the following is a likely cause of increased prices for products, decreased purchasing power, and decreased profit margins?

A) Low unemployment B) Stagnant wages C) Declining living standards D) Cyclical inflation E) Limited credit Answer: A Difficulty: Difficult AACSB: Reflective thinking Question Category: Analytical LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

33 .

103) Which term refers to the pattern of short-term ups and downs in an economy? A) Aggregate output B) Business cycle C) Standard of living D) Balance of payments E) Demand and supply schedule Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system. 104) Which term refers to the total quantity and quality of goods and services that people living in an economic system can purchase? A) Business cycle supply B) Demand and supply schedule C) Standard of living D) Aggregate output E) Consumer price index Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system. 105) Which term refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production? A) Output per capita B) Aggregate output C) Gross domestic product D) Gross national product E) Purchasing power parity Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

34 .

106) Which of the following is measured by productivity?

A) The total value of all goods and services produced by a national economy B) How much a system produces with the resources needed to produce it C) How much output is necessary to produce a certain level of demand D) The standard of living relative to purchasing power parity E) How much gross national product results from inputs of labor Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

107) What is the economic condition characterized by widespread increased prices without increased purchasing power?

A) Unemployment B) Inflation C) Expansion D) Deflation E) Recession Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

108) What is the condition in an economic system in which the amount of money available, and the number of goods and services produced, are growing at about the same rate?

A) Unemployment B) Stability C) Deflation D) Inflation E) Oversupply Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

35 .

109) Which of the following BEST describes nominal GDP? A) Total quantity of goods and services produced by an economic system.

B) Total value of all goods and services produced within a given period by a national economy, measured in current dollars or with all components valued at current prices.

C) Total value of all goods and services produced within a given period by a national economy regardless of where the factors of production are located.

D) Total value of all goods and services produced within a given period by a national economy, adjusted to account for changes in currency values and price changes.

E) Total quantity of goods and services that are imported within a given period of time.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

110) Which is the BEST explanation for why standard of living only increases through productivity?

A) The more goods that are available, the lower prices will be.

B) More goods are available without having to come by additional resources.

C) Productivity increases the money supply in an economy.

D) Purchasing power increases when there is more consumer choice.

E) Prices are determined by the standard of living.

Answer: A Difficulty: Difficult AACSB: Reflective thinking Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

111) Why would a government MOST likely be concerned about its country carrying a trade deficit?

A) A trade deficit means that the country's productivity is low.

B) A trade deficit means local companies do not have enough competition.

C) A trade deficit ties up money that could be used for economic growth.

D) A trade deficit decreases demand for goods overall.

E) A trade deficit means that consumers do not have enough purchasing power.

Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

36 .

112) Which of the following is an indication of national economic growth, shown by measuring aggregate output?

A) Gross domestic product B) Standard of living C) Economic indicators D) Gross national product E) Real growth rate Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

113) When gross domestic product increases, what is the outcome for economic growth?

A) National growth will increase B) The nation will experience a slowdown in growth C) Aggregate output will decrease D) Growth will remain steady when compared to developing nations E) Growth will decline based on the value of the national currency Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

114) When economists measure gross national product, what is being measured within a specific time period, regardless of location?

A) The aggregate output B) The economic growth of the nation C) The growth of domestic factors of production D) The growth rate adjusted for inflation E) The total value of all goods and services Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

37 .

115) Why is gross national product (GNP) considered to be a less valuable indicator of domestic economic performance than gross domestic product (GDP)?

A) GNP does not consider where the economic performance was located.

B) GNP only considers economic performance within the United States.

C) GNP is not adjusted for inflation.

D) GNP does not consider currency fluctuations at the time of product purchase.

E) GNP does not compare output to population rates.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

116) The amount of money that a government owes its creditors is referred to as that country's A) GDP. B) national debt.

C) consumer price index.

D) inflation rate.

E) GNP. Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

117) Which of the following supports the idea that the prices of similar products in different countries should be about the same?

A) Standard of living B) Real growth rate C) Purchasing power parity D) Trade deficit E) Balance of trade Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

38 .

118) Why is it important to calculate purchasing power parity in the global market?

A) It indicates how much consumers will pay for goods and services.

B) It determines interest rates on short-term debt.

C) It identifies how much the nominal GDP should be adjusted.

D) It helps companies determine standards of living across the globe.

E) It indicates the level of disposable income in developed nations.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

119) Which of the following is calculated by dividing the total gross domestic product by the total population?

A) GDP per Capita B) Real growth rate C) Real GDP D) Purchasing power parity E) Standard of living Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

120) Why do companies consider purchasing power parity when pricing goods and services for international markets?

A) It measures economic performance for international workers B) It indicates what people can actually buy in their respective economic system C) It shapes the balance of trade between nations D) It prevents inflation E) It enforces compliance with monetary policies in the home country Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

39 .

121) Which of the following is the economic value of all products that a country exports minus the economic value of all the products it imports?

A) National debt B) Gross domestic product C) Balance of trade D) GDP per capital E) Gross national product Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

122) Which of the following occurs when a country exports more than it imports?

A) Recession B) Negative balance of trade C) Economic stability D) Positive balance of trade E) Inflations Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

123) Why is the United States considered to be a debtor nation?

A) It has a positive balance of trade B) It imposes tariffs on some trade C) The GDP is higher than that of trade partners D) It exports more than it imports E) It has a negative balance of trade Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

40 .

124) Which of the following is an outcome of deflation?

A) Instability B) Economic growth C) Decreasing unemployment D) Positive balance of trade E) Shrinking economy Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

125) Which of the following indicated the level of joblessness among people who are actively seeking work in an economic system?

A) Parity B) Deflations C) Balance of trade D) Unemployment E) Inflation Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

126) Which of the following is a period during which aggregate output, as measured by real GDP, declines A) Stagflation B) System-wide economic disorder C) Recession D) Deflation E) Inflation Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

41 .

127) Which of the following is used by a government to determine how it collects and spends revenue?

A) Deflation B) Fiscal policies C) National debt D) Monetary policy E) Stabilization policy Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

128) Which of the following is used by a government to control the size of its money supply?

A) Monetary policy B) Inflation C) Stabilization policy D) Trade deficits E) Gross domestic product Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

129) Aggregate output refers to a company's annual production of goods or services.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

130) The United States government manages the collection and spending of its revenues through monetary policy.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

42 .

131) The primary measure of growth in the business cycle is inflation.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

132) Inflation results in increased purchasing power for the consumer.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

133) Tax increases and decreases are a form of fiscal policy.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

134) The government can influence the availability of capital through the use of the Federal Reserve System.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

135) Stabilization policy is made up of both monetary and fiscal policy.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

43 .

136) The main measure of growth in the business cycle is aggregate output.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

137) Deflation, an indication that the economy is contracting, is characterized by price stabilization of goods.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

138) If productivity increases, prices charged to consumers will tend to increase as well.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

139) In the United States, the Federal Reserve System, which is the nation's central bank, can influence the ability and willingness of banks to lend money.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

140) Discuss the fiscal and monetary goals of a stabilization policy.

Answer: Fiscal policy and monetary policy make up stabilization policy–government economic policy in which the goal is to smooth out fluctuations in output and unemployment and to stabilize prices. The various government interventions, such as financial bailouts, represent strategies to restore economic stability.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

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141) Explain the types of policies used by the U.S. government to manage the U.S. economy.

Answer: The government acts to manage the U.S. economic system through two sets of policies: fiscal and monetary. It manages the collection and spending of its revenues through fiscal policies. Tax rates, for example, can play an important role in fiscal policies helping to manage the economy. Monetary policies focus on controlling the size of the nation's money supply. Working primarily through the Federal Reserve System (the nation's central bank, often referred to simply as "the Fed"), the government can influence the ability and willingness of banks throughout the country to lend money.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

142) What is the difference between an economic recession and an economic depression?

Answer: To determine whether an economy is going through a recession, start by measuring aggregate output. This is the function of real GDP which is found by making necessary adjustments to the total value of all goods and services produced within a given period by a national economy through domestic factors of production. A recession is more precisely defined as a period during which aggregate output, as measured by real GDP, declines. Most economists agree that the U.S. economy went into recession in 2008. Most also agree that we were gradually emerging from that recession in 2011. A prolonged and deep recession is a depression.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

143) How does unemployment affect economic stability?

Answer: Unemployment is the level of joblessness among people actively seeking work in an economic system. When unemployment is low, there is a shortage of labor available for businesses to hire. As businesses compete with one another for the available supply of labor, they raise the wages they are willing to pay. Higher labor costs eat into profit margins; they raise the prices of their products. Although consumers have more money to inject into the economy, this increase is often undone by higher prices, so purchasing power declines.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Synthesis LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

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144) Discuss the balance of trade in the United States and how it affects debt. Answer: A country's balance of trade is the economic value of all the products that it exports minus the economic value of its imported products. A positive balance of trade results when a country exports (sells to other countries) more than it imports (buys from other countries).

A negative balance of trade results when a country imports more than it exports. A negative balance of trade is commonly called a trade deficit. The United States is a debtor nation rather than a creditor nation. Trade deficit affects economic growth because the amount of money spent on foreign products has not been paid in full. Therefore, it is borrowed money and borrowed money costs more in the form of interest. The money that flows out of the country to pay off the deficit can't be used to invest in productive enterprises, either at home or overseas. Difficulty: Difficult AACSB: Application of knowledge Question Category: Synthesis LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system. 145) How does the amount of national debt influence the bond market in the United States? Answer: Although taxes are the most obvious way the government raises money, it also sells bonds–securities through which it promises to pay buyers certain amounts of money by specified future dates. These bonds are attractive investments because they are extremely safe. The U.S. government is not going to default on them (that is, fail to make payments when due). Even so, they must also offer a decent return on the buyer's investment, and they do this by paying interest at a competitive rate. By selling bonds, therefore, the U.S. government competes with every other potential borrower for the available supply of loanable money. The more money the government borrows, the less money is available for the private borrowing and investment that increase productivity. Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

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146) How does aggregate output influence standards of living? Answer: Experts call the pattern of short-term ups and downs (or, better, expansions and contractions) in an economy the business cycle. The primary measure of growth in the business cycle is aggregate output, the total quantity of goods and services produced by an economic system during a given period. When output grows more quickly than the population, output per capita–the quantity of goods and services per person–goes up, and the system provides more of the goods and services that people want. When these two things occur, people living in an economic system benefit from a higher standard of living, which refers to the total quantity and quality of goods and services that they can purchase with the currency used in their economic system. To know how much your standard of living is improving, you need to know how much your nation's economic system is growing Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 1.4: Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.

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Business Essentials, 13e (Ebert/Griffin) Chapter 2 Understanding Business Ethics and Social Responsibility 1) What are the individual beliefs about what is right and wrong or good and bad referred to as?

A) Motivators B) Rules C) Cultures D) Ethics E) Laws Answer: D Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

2) Which of the following should be the first step in assessing ethical behavior in a certain situation?

A) Seek the advice of managers.

B) Make a judgment based on the outcome of the activity.

C) Consider appropriate moral values.

D) Collect facts related to the situation.

E) Gather a range of opinions on the effectiveness of the situation.

Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

3) Which of the following is likely the single MOST effective step that a company can take to set ethical standards?

A) Offer large cash awards for whistle-blowing.

B) Suggest that employees take ethics training.

C) Post ethical rules on bulletin boards.

D) State that the workplace values diversity.

E) Demonstrate support from top management.

Answer: E Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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4) How do top managers BEST demonstrate a commitment to ethical business practices?

A) By adopting and enforcing written codes of ethics B) By reading employees' e-mails C) By decentralized decision-making practices D) By cooperating with other companies E) By monitoring employees' web searches Answer: A Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

5) Which category of ethics relates to matters such as hiring, firing, working conditions, privacy and respect?

A) Behavior toward economic agents B) Behavior toward employees C) Behavior toward the organization D) Elimination of conflicts of interest E) Social responsibility Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

6) When an activity benefits an individual but not the employer, which ethical dilemma has been created?

A) Lack of social responsibility B) Violation of the code of conduct C) Conflict of morals D) Interaction with primary agents of interest E) Conflict of interest Answer: E Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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7) Which of the following ethical norms ensures an action is consistent with what's fair?

A) Caring B) Morals C) Justice D) Social responsibility E) Economic agents Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

8) Which ethical norm considers whether a particular act optimizes the benefits to those who are affected by it?

A) Utility B) Rights C) Justice D) Caring E) Respect Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

9) When evaluating a decision based on the ethical norm based on individual rights, a manager is MOST likely to consider which of the following questions?

A) Is the decision consistent with what we regard as fair?

B) Does the decision respect the all individuals involved?

C) Is the decision consistent with people's responsibilities to each other?

D) Does the decision optimize the benefits for those who are affected by it?

E) Does the decision comply with current legislation?

Answer: B Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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10) Standards that help to shape behaviors towards employees, the organization, and other economic agents are A) social responsibilities.

B) managerial ethics.

C) whistle-blowing techniques.

D) values.

E) morals.

Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

11) When a firm significantly increases the price of a good or service because of an increase in demand, what unethical practice are they potentially engaging in?

A) Consumerism B) Collusion C) Unfair pricing D) Collaboration E) Price gouging Answer: E Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

12) In addition to an individual's values and morals, which of the following will determine whether a behavior is regarded as ethical or unethical?

A) Laws B) Social context C) Code of Conduct D) Behavior towards the organization E) Opinion of stakeholders Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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13) Sally's boss is out of town and she is considering taking an extended lunch to get some shopping done. Although no one will know she is gone, she knows this is not the right things to do, and that her boss has placed trust in her work ethic. Which of the following confirms Sally's belief about what is right and good, and the social norms expected of her?

A) Social responsibility B) Ethical behavior C) Laws D) Managerial ethics E) Social consciousness Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

14) Which of the following is the ethical or unethical behaviors by employees in the context of their jobs?

A) Justice B) Managerial ethics C) Business ethics D) Individual values E) Morals Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

15) Why do ethics vary from person to person, from situation to situation, and from culture to culture?

A) Ideas of right and wrong must comply with those of the employers in the community.

B) Laws that support ethics vary by culture.

C) It is difficult to distinguish ethics from social responsibility.

D) Ideas of right and wrong are based on beliefs and social context.

E) Social standards can be narrowly interpreted.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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16) Which of the following is the basis for formal laws within society? A) Standards of behavior of managers toward employees B) Codes of conduct C) Business opportunity D) Individuals values and morals E) Prevailing ethics standards Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace. 17) Ron has an employee who he thinks is acting in a manner that is not in the best interest for the organization. Ron has gathered facts from a variety of vendors, suppliers, and coworkers. Which of the following is Ron's next step in assessing the ethical behavior of his employee? A) Determine the utility of the potentially unethical behavior. B) Ask the employee to rationalize their behavior. C) Write a policy that addresses the potentially unethical behavior. D) Make an ethical judgment based on his standards of right and wrong. E) Analyze the facts and determine the most appropriate moral values. Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace. 18) Which of the following is the ethical norm that measures how consistent an act is in terms of people's responsibility to each other? A) Caring B) Morals C) Utility D) Justice E) Rights Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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19) ABCo works hard to maintain a positive working relationship with employees, suppliers, and vendors. They have developed clear positions on how the firm and the employees will conduct business. Which of the following should ABCo use to encourage and guide ethical behavior in the workplace?

A) Statement of rights to privacy B) E-mail monitoring C) Code of conduct D) Monitoring of online searches and other electronic activity E) Social responsibility programs Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

20) In addition to adopting formal written codes to ethical business practices, what else is one of the MOST common approached to formalizing top management's commitment to ethical behavior?

A) Outlining core principles and values B) Revising organizational objectives C) Monitoring stakeholder activities D) Instituting ethics programs E) Tracking employee use of technology Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

21) Woojin is a new employee and wants to ensure he is supporting the organization's core principles and values in all he does. Where can he learn more about the values and principles that are especially important to his organization?

A) Colleges and universities B) Executives who are no longer with the organization C) Peers in the organization D) Written codes and policies E) Small Business Administration Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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22) Ethics are beliefs about what is right and wrong.

Answer: TRUE Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

23) Business ethics refer to ethical or unethical behaviors by employees in the context of their personal lives.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

24) The standards of behavior that guide managers in their work are called written codes.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

25) Some ethical and unethical behaviors fall into gray areas, while others are widely agreed upon.

Answer: TRUE Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

26) A conflict of interest occurs when an activity may benefit the individual to the detriment of his or her employer.

Answer: TRUE Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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27) Ethical values are the same from person to person.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

28) What constitutes ethical behavior is determined entirely by the individual.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

29) An individual's personal code of ethics is shaped by his or her life experiences.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

30) If an action is legal, it will be considered ethical as well.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

31) Though an individual feels that his behavior is ethical, that behavior may still be considered unethical if social norms consider it to be so.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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32) The ethical norm of utility evaluates whether an act respects the rights of all parties.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

33) The most essential element in encouraging ethical behavior in an organization is letting employees dictate ethical norms.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

34) When considering ethical behavior toward primary agents of interest such as customers, competitors, and other stakeholders, there is ethical ambiguity in just about every activity.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

35) Businesses that sincerely stress the importance of ethical behavior tend to have fewer ethical scandals than those that do not.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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36) Discuss the three areas where managerial ethics affect the organization.

Answer: Managerial ethics are the standards of behavior that guide individual managers in their work. Although your ethics can affect your work in any number of ways, it's helpful to classify them in terms of three broad categories. 1.) Behavior toward employees: This category of managerial ethics relates to such matters as hiring and firing, wages and working conditions, and privacy and respect. Ethical guidelines suggest and legal standards require that hiring and firing decisions should be based solely on a person's ability to perform a job. 2.) Behavior toward the organization: Ethical issues can also arise from employee behavior toward employers, especially in such areas as conflict of interest, confidentiality, and honesty. A conflict of interest occurs when an activity may benefit the individual but to the detriment of his or her employer. 3.)

Behavior toward other economic agents: Ethics also come into play in the relationship of a business and its employees with so-called primary agents of interest, mainly customers, competitors, stockholders, suppliers, dealers, and unions. In dealing with such agents, there is room for ethical ambiguity in just about every activity–advertising, financial disclosure, ordering and purchasing, bargaining and negotiation, and other business relationships.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

37) What is the purpose of a written code of ethics?

Answer: A written code of ethics formally announces a company's intent to do business in an ethical manner and provides guidelines for enforcing their code of ethics.

Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

38) What would constitute a conflict of interest in a business setting?

Answer: An activity that benefits the individual to the detriment of his or her employer would be considered a conflict of interest.

Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

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39) Describe the three-step model for applying ethical judgments.

Answer: The three-step model includes (1) gathering the relevant factual information; (2) determining the most appropriate moral values; and (3) making an ethical judgment based on the rightness or wrongness of the proposed activity or policy.

Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

40) What role has e-mail played in business ethics and company practices?

Answer: E-mail messages can be retrieved and used as evidence. An increasingly controversial area regarding business ethics and company practices involves the privacy of e-mail and other communication that takes place inside an organization. For instance, some companies monitor the Web searches conducted by their employees, and the appearance of certain key words may trigger a closer review of how an employee is using the company's computer network. Although some companies argue they do this for business reasons, some employees claim that it violates their privacy.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 2.1: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.

41) Which of the following is the BEST description of organizational stakeholders?

A) Competitors B) Government regulators C) The officers and key employees of an organization D) Individuals and businesses who own stock in a company E) Individuals and groups that are directly affected by the practices of a company Answer: E Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

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42) Which term refers to the way in which a business tries to balance its commitments to groups and individuals in its social environment?

A) Business ethics B) Socialization C) Stakeholder consciousness D) Social responsibility E) Corporatization Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

43) What is the term given to the groups, individuals, and organizations that are directly affected by the practices of an organization?

A) Primary agents of interest B) Social auditors C) Competitors D) Organizational stakeholders E) Local communities Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

44) When businesses work to honor warranties, charge fair prices and stand behind the quality of their products, what stakeholder group are they supporting?

A) Customers B) Employees C) Investors D) Suppliers E) Local communities Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

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45) What stakeholder group is being protected when managers follow proper procedures and strive to be accurate and candid in assessing future growth?

A) Customers B) Employees C) Investors D) Suppliers E) Local communities Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

46) When a multinational organization supports its commitment to stakeholders, which stakeholders are they most concerned with?

A) The stakeholders in their home country B) The stakeholders where most sales are made C) The stakeholders in emerging markets D) The stakeholders represented by the government E) The stakeholders in every country where business is done Answer: E Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

47) What is the name of the concept that expanded the role of business in protecting and enhancing the general welfare of society?

A) Ethics B) Morals C) Social responsibility D) Accountability E) Restraint Answer: D Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

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48) Which element of the stakeholder model of responsibility considers the need to treat workers fairly and make them a part of the team?

A) Customers B) Local communities C) Employees D) Investors E) Suppliers Answer: C Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

49) In order to behave responsibility to stakeholders, Willa's Wholesale often shares delivery schedules, adjusts profit margins, and works to ensure reasonable delivery schedules from those companies who provide Willa's Wholesale with raw material. Which of the following is Willa's Wholesale working with in terms of stakeholder responsibility?

A) Customers B) Investors C) Employees D) Suppliers E) The local community Answer: D Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

50) Each quarter, Mabel determines which local event the company will volunteer with and support financially. They typically donate cash, and allow workers to take the day off work to volunteer at the event. Which of the following stakeholders does Mabel's organization seek to establish a strong relationship with?

A) Investors B) Communities C) Suppliers D) Customers E) Employees Answer: B Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

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51) A business's social responsibility to investors includes following proper accounting procedures.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

52) In the United States, there are increased expectations for a greater social role for business.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Synthesis LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

53) An organizational stakeholder includes any group or individual that is directly affected by the practices of an organization.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Synthesis LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

54) Organizations try to be socially responsible to their local communities, in part, to minimize their negative impact on communities.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Synthesis LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

55) What is the difference between ethics and social responsibility?

Answer: Ethics are beliefs about what is right and wrong or good and bad. Ethics affect individual behavior in the workplace. Social responsibility refers to the way in which a business tries to balance its commitments to groups and individuals in its social environment.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

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56) When defining its sense of social responsibility, a firm typically confronts which areas of concern?

Answer: A firm typically addresses and has social responsibility for the following five areas: its customers, its employees, its investors, its suppliers, and local communities.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

57) How can an organization apply the stakeholder model of social responsibility to its global partners?

Answer: The stakeholder model can also provide some helpful insights into the conduct of managers in international business. In particular, to the extent that an organization acknowledges its commitments to its stakeholders, it should also recognize that it has multiple sets of stakeholders in each country where it does business. A global organization's actions might affect many different communities in dozens of different countries. Similarly, international businesses must also address their responsibilities in areas such as wages, working conditions, and environmental protection across different countries that have varying laws and norms regulating such responsibilities.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

58) Describe the stakeholder model of social responsibility.

Answer: Companies that strive to be responsible to their stakeholders concentrate on five main groups: customers, employees, investors, suppliers, and the local communities where they do business. To be responsible toward their customers, businesses strive to be fair in their pricing, honor warranties, meet delivery commitments, and stand behind the quality of their products.

Businesses that are socially responsible toward their employees treat them fairly, make them a part of the team, and respect their dignity and basic human needs. To be responsible toward investors, businesses follow proper accounting procedures, provide appropriate information to shareholders about financial performance, and manage the organization to protect shareholders rights and investments. Businesses are responsible toward suppliers when they provide realistic delivery schedules and reduced profit margins. Many businesses keep their suppliers informed about future plans and work to partner with them. To be responsible toward communities, businesses often give back through charitable programs and local causes.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

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59) Explain the steps that an organization must take to foster a company-wide sense of social responsibility.

Answer: Social responsibility must first start at the top. No program can succeed without top management support and top management must issue a statement announcing the commitment.

A committee of top managers must then develop a plan detailing the level of management support; some companies set aside percentages of profits for social programs. At this point, managers must set specific priorities. Then, one executive must be put in charge of the firm's agenda, and this individual must monitor the program and ensure that its implementation is consistent with the firm's policy statement. The organization must conduct social audits, which are systematic analyses of the firm's success in using funds earmarked for its social responsibility goals. Failing an audit should prompt a rethinking of the program's implementation and its priorities.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 2.2: Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.

60) What must every corporation do in maintaining and reporting its financial status?

A) Purchase stocks on margin B) Use creative accounting practices C) Support increased stock prices D) Aim to maximize predicted profit margins E) Conform to generally accepted accounting principles Answer: E Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

61) Which of the following occurs when someone uses confidential information to gain from the purchase or sale of stocks?

A) Identity theft B) A margin purchase C) Insider trading D) Collusion E) GAAP standards violation Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

18 .

62) What does the Sarbanes-Oxley Act of 2002 require a chief financial officer to do?

A) Prevent insider trading B) Engage in strategic management C) Guarantee the accuracy of financial reporting D) Hire a forensic accountant E) Oversee the implementation of ethical standards Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

63) Which type of pollution is created by carbon monoxide produced by manufacturing plants?

A) Noise B) Land C) Water D) Air E) Waste Answer: D Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

64) Which of the following includes provisions that control air pollution by members?

A) Sarbanes-Oxley B) GAAP C) Code of ethics D) NAFTA E) FTC Answer: D Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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65) Which of the following is created by the chemical or radioactive by-products of the manufacturing process?

A) Air pollution B) Toxic waste C) Alternative sources of energy D) Carbon dioxide E) Landfill waste Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

66) What is the main cause of water pollution?

A) Acid rain B) Landfill runoff C) Chemical and waste dumping D) Vehicle exhaust E) Decomposition Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

67) What do new forms of solid-waste disposal, such as repurposing combustible waste, help prevent?

A) Future contamination of land B) Toxins C) Use of phosphates D) Runoff E) Zero-landfill claims Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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68) What is the practice of injecting water and chemicals into underground rock in order to break the rock apart called?

A) Recycling B) Toxic waste elimination C) Fracking D) Zero-landfill support E) Repurposing Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

69) Which of the following regulates advertising and pricing practices to protect consumers?

A) Generally Accepted Accounting Principles B) North American Free Trade Agreement C) Food and Drug Administration D) Federal Trade Commission E) Children's Online Privacy Protection Act Answer: D Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

70) Social activism dedicated to protecting the rights of consumers is the result of what?

A) Decreased consumer rights B) Consumerism C) International agreements D) The Consumer Bill of Rights E) Green marketing efforts Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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71) When a firm modifies a production process to limit the consumption of valuable resources, and promotes the product produced as environmentally friendly, which business practice are they engaging in?

A) Collusion B) Consumerism C) Green marketing D) Recycling E) Near zero status Answer: C Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

72) What is the result of two or more firms collaborating on a wrongful act, such as price fixing?

A) Unfair pricing B) Price gouging C) Product collaboration D) Collusion E) Consumerism Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

73) What is the term for an employee who discovers an illegal or unethical activity and tries to put an end to it by speaking up?

A) Whistle-blower B) Inside trader C) Obstructionist D) Colluder E) Accommodator Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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74) When a stakeholder uses confidential information to gain from the sale or purchase of a stock, what ethical violation are they engaging in?

A) Whistle-blowing B) Insider training C) Social accommodation D) Collusions E) Gouging Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

75) Firms typically confront concerns about responsibility towards the environment, customers, employees, and investors, which is referred to as A) social responsibility.

B) whistleblowing.

C) ethics.

D) social consciousness.

E) the stakeholder model of responsibility.

Answer: A Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

76) In terms of climate change, which of the following is considered to be the MOST significant challenge for contemporary businesses?

A) Carbon offsets B) Consumer rights C) Maintaining high levels of return on investments D) Toxic waste disposal E) Controlling pollution Answer: E Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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77) In addition to preventing future of contamination, which of the following is a key issue that characterizes land pollution?

A) Restoring the quality of land that is already damaged B) Managing acid rain and its effects C) Disposing of recycled products D) Maintaining the fracking process E) Developing agreements with trade partners in other nations Answer: A Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

78) Which of the following is the reconversion of waste materials into useful products?

A) Green marketing B) Proactive stance to social responsibility C) Social consciousness D) Fracking E) Recycling Answer: E Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

79) Which element of green marketing support the process of using renewable resources and managing limited resources responsibly and efficiently?

A) Sustainability B) Packaging reduction C) Carbon offset D) Product modification E) Production processes Answer: A Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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80) Pour House Coffee uses cups and napkins make from recycled materials. Which element of green marketing does Pour House Coffee support by using these products? A) Carbon offset B) Sustainability C) Product modification D) Packing reduction E) Production process Answer: E Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors. 81) Environmental issues are now a significant challenge for socially reasonable organizations. Answer: TRUE Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors. 82) A company that does not act responsibly toward its customers may lose their trust and ultimately their business.

Answer: TRUE Difficulty: Easy AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors. 83) The Consumer Bill of Rights is backed by numerous federal and state laws.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors. 84) What is collusion? Answer: Collusion occurs when two or more parties agree to collaborate on such wrongful acts as price fixing; price fixing occurs when firms illegally control supplies and prices of products. Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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85) Define consumerism.

Answer: Consumerism is social activism dedicated to protecting the rights of consumers in their dealings with businesses.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

86) Identify who is responsible for regulating advertising and what the key issues are.

Answer: To encourage responsibility, the Federal Trade Commission (FTC) regulates advertising and pricing practices. Some critics also point to misleading labelling and advertising in the agricultural sector. Another issue concerns advertising that some consumers consider morally objectionable–for products such as underwear, condoms, alcohol, tobacco products, and firearms. Laws regulate some of this advertising (for instance, tobacco cannot be promoted in television commercials but can be featured in print ads in magazines), and many advertisers use common sense and discretion in their promotions.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Application LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

87) What is insider trading? Why would an investor engage in it?

Answer: Insider trading is using confidential information to gain from the purchase or sale of stocks. Confidential information is information that is not available to the general public but that is available to a few people because of their position within a company. For example, investors with inside information may sell a stock at a high price just before a piece of negative information becomes public and the price plummets, thus preventing a big loss. Similarly, an investor with inside information may buy stock at a low price just before a piece of favorable information becomes public and the price of the stock increases.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Application LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

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88) Discuss the six elements of the Consumer Bill of Rights.

Answer: Consumers have a right to safe products. They have a right to be informed about all relevant aspects of a product. Consumers has a right to be heard, and have a right to choose what they buy. Consumers have a right to be educated about purchases, and consumers have a right to courteous service.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Application LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

89) Why should organizations carefully consider social responsibility and ethics in their international advertising efforts?

Answer: Advertising standards in different countries vary in many different ways. Some of the differences are attributable to sociocultural norms. For instance, ads and billboards in some parts of Europe occasionally feature nudity and may be much more provocative than might be accepted in the United States, while ads in the Middle East and parts of Asia are likely to be very conservative. Legal restrictions also vary across different countries. For example, U.S. regulations prohibit tobacco companies from advertising on television and most magazines. But in other countries tobacco companies may still be allowed to advertise in print media and on television.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Application LO: 2.3: Show how the concept of social responsibility applies both to environmental issues and to a firm's relationships with customers, employees, and investors.

90) If a firm hides responsibility for wrongdoing, what type of stance are they taking toward social responsibility?

A) Responsible B) Obstructionist C) Accommodative D) Proactive E) Moderate Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

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91) What concept is supported by those who believe that corporations should help improve the lives of citizens? A) Social auditing B) Government initiative C) Collusion D) Social responsibility E) Social accommodation Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business. 92) What stance do firms who do as little as possible to solve social or environmental problems take? A) Social accommodation B) Obstructionist C) Defensive D) Accommodative E) Proactive Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business. 93) If a manager believes their job is to generate profits and is willing to do everything legally required, but no more, what social responsibility stance is being taken?

A) Proactive B) Accommodative C) Defensive D) Obstructionist E) Social accommodation Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

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94) Firms that meet, and occasionally exceed legal and ethical requirements take what type of social responsibility stance?

A) Proactive B) Social accommodation C) Defensive D) Accommodative E) Obstructionist Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

95) Those firms who look for opportunities to contribute positively to society because of a sincere desire to improve social welfare take what type of social responsibility stance?

A) Obstructionist B) Accommodative C) Social accommodations D) Defensive E) Proactive Answer: E Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

96) What is the most common and direct way to provide direct financial support when taking a proactive stance to social responsibility?

A) Set up a foundation B) Reduce prices C) Make a donation with each purchase D) Use the Internet to solicit donations E) Follow all laws set forth by the government Answer: A Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

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97) In business, ethical decisions are generally based on what?

A) Social responsibility B) Individual ethics C) Laws D) Societal norms E) Stakeholder returns Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

98) The proactive approach to social responsibility argues that profits should not be spent on social programs.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

99) The strongest stance toward social responsibility a company can take is a proactive one.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

100) There is general consensus within the United States that social responsibility must take precedence over profits.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

101) Small businesses must answer many of the same social responsibility questions as big businesses.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

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102) Organizations that take a proactive approach to social responsibility actively look for opportunities to contribute to the well-being of the social environment. Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business. 103) An organization that tries to cover up wrong doings is taking a defensive stance toward social responsibility. Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business. 104) How do issues of social responsibility and ethics affect small business? Answer: Small businesses must address, more or less, the same issues as big businesses—the differences are primarily differences of scale.

Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business. 105) Identify two arguments against social responsibility as a business goal. Answer: Some skeptics of business-sponsored social projects fear that if businesses become too active, they will gain too much control over the ways in which those projects are addressed by society as a whole. Other critics claim that business organizations lack the expertise needed to address social issues. Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

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106) Discuss social responsibility actions of a company that takes a defensive stance towards social responsibility.

Answer: Organizations that take a defensive stance will do everything that is legally required, including admitting to mistakes and taking corrective actions, but nothing more. Defensive stance managers insist that their job is to generate profits and might, for example, install pollution-control equipment dictated by law but not higher-quality equipment to further limit pollution.

Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

107) Describe the obstructionist stance to social responsibility.

Answer: The few organizations that take an obstructionist stance to social responsibility usually do as little as possible to solve social or environmental problems, have little regard for ethical conduct, and will go to great lengths to deny or cover up wrongdoing.

Difficulty: Difficult AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.4: Identify four general approaches to social responsibility and note the role of social responsibility in small business.

108) How does the government affect the idea of social responsibility in a planned economy?

A) The government requires higher stakeholder returns.

B) The government passes laws to make sure business interests do not damage society.

C) The government heavily regulates business activities to ensure the business supports social ideals.

D) The government attempts to offset small business restrictions.

E) The government limits regulations in exchange for planned giving.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

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109) When the government dictates what organizations can and cannot do, what tactic is the government using?

A) Social responsibility B) Taxation C) Stakeholder support D) Regulation E) Socialism Answer: D Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

110) Where do direct regulations imposed by the government evolve from?

A) Laws B) The National Labor Relations Board C) Indirect channels D) The Foreign Corrupt Practices Act E) Social beliefs Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

111) What government agency has the responsibility to handle investor-related issues?

A) SEC B) Department of Labor C) FTC D) Environmental Protection Agency E) EEOC Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

33 .

112) What government agency has the responsibility to oversee consumer-related concerns?

A) Department of Labor B) FTC C) Equal Employment Opportunity Commission D) SEC E) National Labor Relations Board Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

113) Which of the following allows for financial sanctions against businesses or business officials who engage in bribery?

A) Sarbanes-Oxley Act B) SEC Act C) U.S. Foreign Corrupt Practices Act D) NRA E) Political Action Committees Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

114) In what way can the government use indirect regulation to affect social responsibility?

A) Enacting laws B) Supporting shareholders C) Imposing fines to violators D) Providing tax incentives E) Cooperating with foreign governments Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

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115) In what way can a business or industry represent themselves before political bodies in order to influence the government?

A) Personal contacts B) Financial gifts C) Lobbying D) Offering favors E) Voting Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

116) If an individual business person wanted to present his or her opinion on a piece of legislation, what method might be used?

A) Voting B) Lobbying C) Favors D) Personal contacts E) Political action committee meetings Answer: D Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

117) What types of organizations are used to solicit money that then is distributed to political candidates?

A) Lobbies B) Government agencies C) Stakeholders D) Ethical compliance leaders E) Political action committees Answer: E Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

35 .

118) When a business hires a staff to formally represent the organization before a political body, in efforts to influence that political body, the business is A) using personal contacts.

B) starting a political action committee.

C) lobbying.

D) asking for favors.

E) campaigning.

Answer: C Difficulty: Easy AACSB: Analytical thinking Question Category: Concept LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

119) In addition to government regulation, in which way can the government regulate business practices?

A) Legislation B) Political action committees C) Bribes D) Fines E) Taxes Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

120) It is legal to solicit favors from an organization or politician, or use other influence tactics to gain support.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

121) Government will most often influence organizations through the establishment of laws and rules that dictate what organizations can and cannot do.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

36 .

122) Critics of indirect regulation maintain that a free market system would accomplish the same goals as government regulations.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

123) Discuss the difference between lobbying and using Political Action Committees as a means to influence government.

Answer: Lobbying, or the use of persons or groups to formally represent an organization or group of organizations before political bodies, is an effective way to influence the government.

Lobbyists work to represent an organization's position on an issue and to influence members of Congress when voting on legislation. Political action committees (PACs) are special organizations created to solicit money and then distribute it to political candidates and groups working on a particular political issue. Employees of a firm may be encouraged to make donations to a particular PAC because managers know that it will support candidates with political views similar to their own. PACs, in turn, make the contributions themselves, usually to a broad slate of state and national candidates and use monies collected to develop advertising campaigns for or against a candidate or issue.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

124) Describe the ways that the government attempts to shape social responsibility.

Answer: The government (national, state, or local) attempts to shape social responsibility practices through both direct and indirect channels. Direct influence most frequently is manifested through regulation, whereas indirect influence can take a number of forms, most notably taxation policies.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

37 .

125) Explain how the government most often directly influences organizations.

Answer: The government most often directly influences organizations through regulation, the establishment of laws and rules that dictate what organizations can and cannot do. This regulation usually evolves from social beliefs about how businesses should conduct themselves.

To implement legislation, the government generally creates special agencies to monitor and control certain aspects of business activity. A variety of government agencies have the power to levy fines or bring charges against organizations that violate regulation.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 2.5: Explain the role of government in social responsibility in terms of how governments and businesses influence each other.

126) Which of the following is a way to tell how an organization is doing in meeting its social responsibility goals?

A) Governmental mandate B) Executive summary C) Social audit D) Government initiative E) Financial report Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Analytical LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

127) Because of the influence of a more sophisticated and educated public, what approach should corporations take to develop social responsibility plans?

A) The same approach they take when developing any other business strategy B) Create new legal and implied requirements C) Develop an informal plan and use it to see what work before incorporating those ideas to a formal plan D) Increase ethical understanding and training for leadership E) Increase philanthropic giving Answer: A Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

38 .

128) Which of the following is an informal dimension for managing social responsibility? A) Legal compliance B) Whistle-blowing C) PAC committees D) Ethical compliance E) Philanthropic giving Answer: B Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility. 129) What is the extent to which an organization conforms to local, state, federal, and international laws known as? A) Government agency support B) Social responsibility C) Legal compliance D) Political action E) Free-trade Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility. 130) What is the extent to which members of an organization follow basic ethical and legal standards of behavior? A) Social responsibility B) Norms C) Values D) Ethical compliance E) Legal compliance Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

39 .

131) Which of the following is the act of awarding funds or gifts to charities?

A) Ethical compliance B) Political action C) Lobbying D) Informal dimensions of giving E) Philanthropic giving Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

132) Which of the following best supports an organization's stance in terms of social responsibility and ethical leadership?

A) Philanthropic giving B) Organizational leadership practices C) Line and staff members D) Stakeholders E) Government intervention Answer: B Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

133) To ensure efforts are producing the desired benefit, what must a socially responsible business use?

A) Government regulation B) The concept of control C) Ethics policies D) Internet campaigns E) Senior leadership task forces Answer: B Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

40 .

134) When conducting a corporate social audit, what must be evaluated?

A) Efforts of competitors B) General goals that are flexible, based on need C) The resources devoted to each goal D) The strength of the leadership team E) International laws and regulation Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

135) Within the organization, the use of formal committees, training, and codes of conduct help to ensure standards of A) ethical compliance.

B) philanthropic giving.

C) organizational leadership.

D) social responsibility.

E) legal compliance.

Answer: A Difficulty: Easy AACSB: Analytical thinking Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

136) Ethical compliance is the extent to which an organization conforms to local, state, and federal laws.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

137) A whistle-blower is an outsider who reports publicly on the wrongdoings of companies.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

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138) Most firms use outside auditors to conduct their social audit.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Concept LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

139) Most philanthropic giving in the United States is targeted towards the arts.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

140) A corporate social audit acts to analyze the effectiveness of a firm's social performance.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

141) Discuss ways in which an organization can help to ensure all members of the organization participate in ethical compliance.

Answer: Ethical compliance is the extent to which the members of the organization follow basic ethical (and legal) standards of behavior. Organizations have increased their efforts in this area by providing training in ethics and developing guidelines and codes of conduct. These activities serve as vehicles for enhancing ethical compliance. Many organizations also establish formal ethics committees. These committees might review proposals for new projects, help evaluate new hiring strategies, or assess a new environmental protection plan. They might also serve as a peer review panel to evaluate alleged ethical misconduct by an employee.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

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142) Discuss ways in which an organization can formally analyze the effectiveness of its social performance.

Answer: An organization may sometimes actually evaluate the effectiveness of its social responsibility efforts. In addition, some businesses occasionally conduct a corporate social audit, a formal and thorough analysis of the effectiveness of a firm's social performance. A task force of high-level managers from within the firm usually conducts the audit. It requires that the organization clearly define all of its social goals, analyze the resources it devotes to each goal, determine how well it is achieving the various goals, and make recommendations about which areas need additional attention. Recent estimates suggest that around 80 percent of the world's 250 largest firms now issue annual reports summarizing their efforts in the areas of environmental and social responsibility.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 2.6: Discuss how businesses manage social responsibility in terms of both formal and informal dimensions and how organizations can evaluate their social responsibility.

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Business Essentials, 13e (Ebert/Griffin) Chapter 3 Entrepreneurship, New Ventures, and Business Ownership 1) Which entity is defined as independent and has little influence on its market? A) Corporation B) Joint venture C) Small business D) Partnership E) Government agency Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business. 2) Traditionally, the U.S. Department of Commerce considers a business "small" if it has fewer than how many employees? A) 10 B) 50 C) 100 D) 500 E) 1,500 Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business. 3) Which of the following industry groups is the largest segment of small business enterprise? A) Manufacturing B) Wholesaling C) Retailing D) Transportation E) Services Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

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4) Which of the following types of venue is favored by small-business retailers because they can focus limited resources on narrow or small market segments? A) Superstores B) Catalog showrooms C) Specialty shops D) Department stores E) Studio workrooms Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business. 5) Why is it difficult to compare relative job growth for different-sized businesses? A) Sourcing up-to-date employment figures is difficult. B) Many small businesses experience rapid unreported growth. C) Spheres of influence overlap between the small and big business sectors. D) Staff size of small businesses tends to change faster than staff size of big businesses. E) It is hard to determine the cutoff point at which a small business becomes a large business. Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business. 6) Which of the following can assist a small business and helps to determine standards based on industry? A) The U.S. Department of Commerce B) The Small Business Administration C) A franchise D) Venture capitalist E) The Small Business Development Center Answer: B Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

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7) Even though an investor is not interested in owning their own business, why do they need to understand entrepreneurship?

A) To understand why someone would want to work so hard for a small return B) To determine the key characteristics of success C) To understand how to convert a great idea to a profitable idea D) To assess the market potential for up-and-coming businesses E) To learn how to set up a business plan Answer: D Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

8) In a small business, who determines prices for wholesalers and customers?

A) Customers B) Franchise owners C) Market forces D) Small business administration E) Small business owners Answer: C Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

9) The contribution a small business on the U.S. economy is measured based on its impact to which economic systems?

A) Bank loans, and contributions to big business B) International trade, interest rates, and the service industry C) Bank loans and innovation D) The service industry, the stock market, and job creation E) Job creation, contributions to big business, and innovation Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

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10) When do new businesses often get started?

A) When there is an economic recession B) When big businesses sell most of their products to consumers C) When big businesses sell most of their product to small firms D) When goods are only available in bulk E) In response to emerging opportunities Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

11) The Small Business Administration is the government agency charged with owning small businesses.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

12) The more resources required to start a business, the less likely it is that small firms will dominate the industry.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

13) Small businesses produce more patents per employee than large patenting firms.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

14) Most businesses in the United States are large businesses with more than 500 employees.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

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15) Major innovations are most likely to come from large corporations.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

16) Small businesses tend to hire at a slower rate, but they also rarely lay employees off.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

17) The Small Business Administration (SBA) may consider a business with as many as 1500 employees to be small as long as it has relatively little influence in its market.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

18) How is the U.S. economy affected by small businesses?

Answer: Small businesses affect the U.S. economy through job creation and innovation and by making products for and selling products made by big businesses. Small businesses are an important source of new jobs in the United States. Innovations are as likely to come from small businesses as big businesses. Finally, most of the products made by big businesses are sold to consumers by small businesses. Big businesses often depend on small businesses as suppliers as well. By creating jobs, fostering innovation, and providing goods and services, small businesses have a positive effect on the U.S. economy.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

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19) Discuss the contribution to big business that is made by small businesses. Answer: Most of the products made by big businesses are sold to consumers by small ones. For example, most dealerships that sell Chevrolets, Toyotas, and Hondas are independently operated. Even as more shoppers turn to online shopping, smaller businesses still play critical roles. For instance, larger traditional retailers with an online presence actually outsource the management of this part of their business and the distribution of their products to other firms, many of them small or regional companies. Smaller businesses also provide data storage services for larger businesses. Moreover, small businesses provide big ones with many of their services and raw materials. Microsoft, for instance, relies on hundreds of small firms for most of its routine code- writing functions. Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business. 20) Identify three popular areas of small business and the impact small businesses make in that sector. Answer: 1.) Services: About 56.2 percent of businesses with fewer than 20 employees are involved in the service industry, which ranges from marriage counseling to computer software, from management consulting to professional dog walking. Partly because they require few resources (and hence don't cost as much to start), service providers constitute a large segment of small business. 2.) Retailing: Retailers, which sell products made by other firms directly to consumers, account for about 13.69 percent of small businesses. Usually, people who start small retail businesses favor specialty shops, such as big men's clothing or gourmet coffees that let the owners focus limited resources on narrow or small market segments. 3.) Construction: About 9.57 percent of all U.S. businesses are involved in construction. Because many construction jobs are small local projects, such as a homeowner adding a garage or remodeling a room, local contractors are often best suited to handle them. 4.) Wholesaling: Small business owners often do well in wholesaling, which accounts for about 5.28 percent of businesses with fewer than 20 employees. Wholesalers buy products in bulk from manufacturers or other producers and store them in quantities and locations convenient for selling them to retailers. 5.) Finance and Insurance: Financial and insurance firms account for about 6.6 percent of small businesses. Most of these businesses, such as local State Farm Insurance offices, are affiliates of or agents for larger national firms. Small locally owned banks are also common in smaller communities and rural areas. Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.1: Define small business, discuss its importance to the U.S. economy, and explain popular areas of small business.

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21) Which of the following BEST defines those who assume the risk of business ownership?

A) Entrepreneurs B) Customers C) Corporate partners D) The Small Business Administration E) Banks Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

22) Which of the following is the process of seeking business opportunities under conditions of risk?

A) Investment B) Entrepreneurship C) Leadership D) Diversification E) Growth Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

23) Which term is most closely associated with enterprises that pursue entrepreneurship with the goal of independence from working for someone else, with a reasonable degree of financial security?

A) Vision B) New ventures C) Small business D) LLC E) Dominance Answer: C Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

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24) When an entrepreneur has the goals of growth and expansion, with the vision of turning the business into a large business, what term is used when referring to the business?

A) Visionary B) Small Business C) Diversification D) Start-up E) Expansionist Answer: D Difficulty: Difficult AACSB: Application of knowledge Question Category: Analytical LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

25) Which of the following is almost always a key element in entrepreneurship?

A) Growth B) Aspiration C) Self-reliance D) Risk E) Planning Answer: D Difficulty: Difficult AACSB: Application of knowledge Question Category: Analytical LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

26) People who assume the risk of business ownership with a primary goal of growth and expansion are called entrepreneurs.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

27) Most successful entrepreneurs have a strong desire to be their own bosses.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

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28) Not all entrepreneurs want to grow their business, some prefer to keep their business small.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

29) The first step in becoming an entrepreneur is to have clear goals in the early stages of development.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

30) Explain entrepreneurship and describe key entrepreneurial characteristics.

Answer: Entrepreneurs are people who assume the risk of business ownership.

Entrepreneurship is the process of seeking business opportunities under conditions of risk. Some entrepreneurs have a goal of independence and financial security, whereas others want to launch a new venture that can be grown into a large business. Most successful entrepreneurs are resourceful and concerned for customer relations. They have a strong desire to be their own bosses and can handle ambiguity and surprises. Today's entrepreneur is often an open-minded leader who relies on networks, business plans, and consensus and is just as likely to be female as male. Finally, although successful entrepreneurs understand the role of risk, they do not necessarily regard what they do as being risky.

Difficulty: Easy AACSB: Reflective thinking Question Category: Concept LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities.

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31) Discuss the various goals of those who pursue entrepreneurship. Answer: People may decide to pursue entrepreneurship for a variety of reasons. Many entrepreneurs seek to launch a new business with the goal of independence–independence from working for someone else, coupled with some reasonable degree of financial security. Such entrepreneurs want to achieve a safe and secure financial future for themselves and their families but do not necessarily aspire to grow their business beyond their capacity to run it.

Other entrepreneurs launch new businesses with the goal of growth and expansion–that is, to transform their venture into a large business. Terms such as new ventures and start-ups are often used to refer to these kinds of businesses. In still other cases, the goals of an entrepreneur may not always be clear in the early stages of business development. For instance, one entrepreneur might launch a business with little or no expectation that it will have huge growth potential but then find that it can grow dramatically. Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 3.2: Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and activities. 32) What does an entrepreneur use to summarize his or her business strategy for a proposed new venture? A) Success chart B) Director's guideline C) Financial blueprint D) Business plan E) Balance sheet Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises. 33) What is considered to be a significant disadvantage of owning a franchise? A) Start-up costs B) Operational guidelines C) Difficulty obtaining loans D) Double taxation E) Competition Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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34) What is the MOST important source of money for new business start-ups? A) Banks B) The SBA C) Personal resources D) Government grants E) Venture capital Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises. 35) Who constitutes the membership of SCORE? A) Retired executives B) Venture capitalists C) Company officers D) Commercial lenders E) Successful entrepreneurs Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises. 36) Which of the following does a start-up company need in order to estimate the required size of a plant, store, or office, inventory levels, and size of staff? A) Sales forecast B) Tax estimate C) Business objective D) Stock options E) Funding source Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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37) Which of the following is the major drawback of accepting venture capital? A) Sharing company control B) Having to pay high interest rates C) Limiting expansion D) Facing a short repayment period E) Having to write proposals Answer: A Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises. 38) Which of the following are groups of small investors seeking to make profits on companies with rapid growth potential? A) Community banks B) Venture capital companies C) Equity managers D) Government securities dealers E) Stock brokers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises. 39) Which of the following is federally licensed to borrow money from the Small Business Administration to invest in or lend to small businesses? A) SCORE B) SBICs C) SBDC D) FDIC E) SEC Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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40) Which of the following helps entrepreneurs gain skills that are essential for running a business?

A) ESOP B) SBIC C) SEC D) LLC E) SBA Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

41) Which distinctive competency must an entrepreneur identify when attempting to enter a market segment that is not currently being exploited?

A) The ability to identify new markets B) The ability to identify niche markets C) The ability to differentiate themselves from others in the market D) The ability to get the highest return without driving away customers E) The ability to move quickly to take advantage of new opportunities Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

42) Which of the following is considered to be an established market?

A) A segment of a market that is currently not be exploited B) One where many firms compete according to well-defined criteria C) One where an entrepreneur can move quickly to take advantage of opportunity D) A segment of a market where first-mover advantage is not established E) An existing business where the entrepreneur operates under a license issued by a parent company Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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43) Which of the following explains first mover advantage?

A) The concept that the first in the market will make the most money B) The concept that a firm who exploits an opportunity before others has an advantage C) The concept that there is an advantage in leaving a market when it becomes flooded D) The concept that large organizations cannot take advantage of an opportunity as quickly as an entrepreneur E) The concept that there is more risk being first, but also more reward, if successful Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

44) What is the first step in becoming an entrepreneur?

A) Deciding to proceed B) Formulating a business plan C) Identifying distinctive competencies D) Searching for capital to invest E) Implementing plans and opening Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

45) Which key element of a business plan will determine inventory, size of space required, and number of employees needed?

A) Financial planning B) Comparing existing businesses C) Sales forecasting D) Setting goals and objectives E) Identifying strategies and how to implement them Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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46) Which of the following is the advantage to starting a business from scratch instead of buying an existing business?

A) There is a proven ability to attract customers.

B) Profit is generated sooner.

C) There is a stronger relationship with lenders and other stakeholders.

D) There are no ill-effects from the previous owner.

E) There is a clearer picture of what to expect in terms of start-up.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

47) Where can a new business owner go to seek help and learn from other institutions and disciplines?

A) The Service Corps of Retired Executives (SCORE) B) The Small Business Development Center (SBDC) C) Small business investment companies (SBICs) D) Venture capitalist E) Minority Enterprise Small Business Investment Companies (MESBICs) Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

48) A business plan demonstrates how an entrepreneur's business strategy will be implemented.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

49) Loans are the most important sources of money for new businesses.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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50) Lending institutions are more likely to help finance the purchase of an existing business rather than the start-up of a business from scratch.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

51) A group of small investors who invest money in companies in return for partial ownership is known as a small-business development company.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

52) Small-business investment companies (SBICs) may be sponsored by the federal government.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

53) The Small Business Development Center provides micro loan programs for members.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

54) Franchisees may be obligated to contribute a percentage of sales to parent corporations.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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55) Identifying niches in an established market is a form of distinctive competency.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

56) Discuss four sources of financing for starting up a small business.

Answer: Financing for starting up a new business may come from personal resources, bank loans, venture capital firms, or small-business investment companies (SBICs). The most important source of financing for a small business is the owner's personal resources. Bank loans are a second source of financing. Venture capital firms invest money in a business in return for stock. These firms are groups of small investors seeking to make profits on companies with rapid growth potential. SBICs take a more balanced approach in their choices than do venture capital firms. SBICs are federally licensed to borrow money from the SBA to invest in or lend to small businesses. Financing for starting up a new business may come from personal resources, bank loans, venture capital firms, or SBICs. Difficulty: Difficult AACSB: Application of knowledge Question Category: Synthesis, Concept LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

57) Why might an entrepreneur wish to purchase an existing business rather than start one from scratch?

Answer: An entrepreneur may wish to purchase an existing business because of an increased chance for success. An existing business will have established working relationships with lenders, suppliers, and the community. The track record of an existing business gives potential buyers a much clearer picture of what to expect than any estimate of new business prospects. The advantage of buying an existing business is better chances of success, as business relationships have already been established and past records give an indication of future business possibilities.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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58) Discuss the advantages and disadvantages of owning a franchisee?

Answer: The advantages of franchising include access to managerial and financial help, the benefits of the selling corporation's expertise and experience, and reduced chances of failure. The disadvantages of franchising include significant start-up costs and continued obligations to contribute a percentage of sales to parent corporations. Advantages include access to managerial and financial help and the benefits of the selling corporation's expertise and experience, which can support increased chances of success. The disadvantages include significant start-up costs and ongoing commitments to contribute a percentage of sales to parent corporations.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Synthesis LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

59) Describe three ways to establish distinctive competencies.

Answer: An organization's distinctive competencies are the aspects of business that the firm performs better than its competitors. The distinctive competencies of small business usually fall into three areas: (1) the ability to identify new niches in established markets, (2) the ability to identify new markets, and (3) the ability to move quickly to take advantage of new opportunities.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Synthesis LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

60) How do successful entrepreneurs identify new markets?

Answer: Successful entrepreneurs also excel at discovering whole new markets. Discovery can happen in at least two ways. First, an entrepreneur can transfer a product or service that is well established in one geographic market to a second market. Second, entrepreneurs can sometimes create entire industries. Because entrepreneurs are not encumbered with a history of doing business in a particular way, they are usually better at discovering new markets than are larger, more mature organizations.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Synthesis LO: 3.3: Describe distinctive competence, the business plan, and the start-up decisions made by small businesses and identify sources of financial aid available to such enterprises.

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61) Which of the following is an effective way for an entrepreneur to become a competent manager? A) Working alone B) Relying on luck C) Getting a college degree D) Being open to opportunities E) Working for a successful company first Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses. 62) Which of the following represents the fastest-growing segment of minority business ownership? A) African Americans B) Asians C) Hispanics D) Pacific Islanders E) Europeans Answer: A Difficulty: Easy AACSB: Diverse and multicultural work environments Question Category: Concept LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

63) Which of the following is the MOST significant recent trend in small-business start-ups?

A) Entrepreneurs who cross over from big business B) Increased opportunities for minorities C) Increased opportunities for women D) Emergence of e-commerce E) Global economic downturn Answer: D Difficulty: Moderate AACSB: Integration of real-world business experiences Question Category: Concept LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

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64) Which of the following factors MOST contributes to small business failure? A) Managerial incompetence or inexperience B) Bad product design C) Legal problems D) Time spent raising capital E) Personnel issues Answer: A Difficulty: Moderate AACSB: Diverse and multicultural work environments Question Category: Application LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses. 65) A new business should have enough capital to operate at least how many months without earning a profit? A) 1 B) 2 C) 4 D) 6 E) 9 Answer: D Difficulty: Moderate AACSB: Diverse and multicultural work environments Question Category: Application LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses. 66) Which of the following are used to keep a business on track and alert to potential trouble withing the company? A) Capital B) Small Business Association financial programs C) Venture capitalists D) Control systems E) Sales forecasting Answer: D Difficulty: Moderate AACSB: Diverse and multicultural work environments Question Category: Application LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

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67) Which of the following is a factor typically cited to explain the success of a small business?

A) Niche marketing B) Small Business Association C) Control systems D) Capital E) Market demand Answer: E Difficulty: Moderate AACSB: Diverse and multicultural work environments Question Category: Application LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

68) The number of minority-owned businesses has decreased in recent years.

Answer: FALSE Difficulty: Easy AACSB: Diverse and multicultural work environments Question Category: Application LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

69) Many new businesses are started by people who have left big corporations.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

70) The survival rate among small businesses has been declining in recent years.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

71) Neglect is a major factor that contributes to small business failure.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

21 .

72) The most significant trend in new entrepreneurial ventures is the crossover from big business.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

73) Entrepreneurs rarely find opportunity in the global market.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

74) How has the emergence of e-commerce affected entrepreneurship?

Answer: The most significant trend is the rapid emergence of e-commerce and other online points of entry. Because the Internet provides fundamentally new ways of doing business, savvy entrepreneurs have created and expanded new businesses faster and easier than ever before. Such leading-edge firms as Google, Amazon, and eBay owe their existence to the Internet.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

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75) Identify four reasons why half of all new business fail to survive.

Answer: Although no set pattern has been established, four general factors contribute to failure: 1.) Managerial incompetence or inexperience. Some entrepreneurs put too much faith in common sense, overestimate their own managerial skills, or believe that hard work alone ensures success.

If managers don't have a sound business plan, don't know how to make basic business decisions, or don't understand basic management principles, they aren't likely to succeed in the long run. 2.)

Neglect. Some entrepreneurs try to launch ventures in their spare time, and others devote only limited time to new businesses. But starting a small business demands an overwhelming time commitment. If you aren't willing to put in the time and effort that a business requires, you aren't likely to survive. 3.) Weak control systems. Effective control systems keep a business on track and alert managers to potential trouble. If your control systems don't signal impending problems, you may be in serious trouble before you spot more obvious difficulties. 4.) Insufficient capital.

Some entrepreneurs are overly optimistic about how soon they'll start earning profits. In most cases, it takes months or even years. Experts say you need enough capital to operate at least 6 months without earning a profit; some recommend enough to last a year.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.4: Discuss the trends in small business start-ups and identify the main reasons for success and failure among small businesses.

76) Which of the following types of businesses is MOST common in the United States?

A) Sole proprietorships B) General partnerships C) Cooperatives D) Corporations E) Limited partnerships Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

77) In which business sector are cooperatives still important?

A) Manufacturing B) Automotive C) Public utilities D) Agriculture E) Health care Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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78) Which of the following legal forms of business is owned and usually operated by a single person who is responsible for its debts?

A) Cartel B) Corporation C) General partnership D) Sole proprietorship E) Limited partnership Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

79) What is a major drawback of sole proprietorships?

A) Short-term focus of shareholders B) Work flexibility C) Low start-up costs D) Unlimited liability E) Structured hours Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

80) Which of the following will force a sole proprietorship to be legally dissolved?

A) Financial limitations B) The partners reorganize the firm's structure C) Tax benefit issues D) The owner donates profits E) The owner dies Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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81) What resources does a sole proprietorship primarily depend on?

A) The corporation B) Foreign investors C) Capital markets D) Those of the owner E) A committed clientele Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

82) What type of business has two or more owners who share in the operation of the firm and are financially responsible for its debts?

A) Corporation B) Partnership C) Cooperative D) Conglomerate E) Nonprofit Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

83) What is the most common type of partnership?

A) Limited partnership B) Corporate partnership C) General partnership D) Sole partnership E) Cooperative partnership Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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84) Who invests all or most of the of the funds needed for a business but plays no role in its management?

A) Silent partner B) Sole proprietor C) General partner D) Principal E) Director Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

85) What is the a key advantage of general partnerships?

A) The unlimited liability of the partnership B) The ability to grow with the addition of new talent and money C) The ease of implementing an effective control system D) The increased role of luck E) The need for minority partners Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

86) What do both sole proprietorships and partnerships potentially lack?

A) Trust B) Legal standing C) Continuity D) Shared vision E) Adaptable processes Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Synthesis LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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87) Which of the following is a partner who actively manages a firm and has unlimited liability for its debts? A) Limited partner B) General partner C) Stockholding partner D) Public partner E) Silent partner Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

88) Which of the following is an advantage of sole proprietorships? A) Ease in attracting a silent partner B) Sales and expenses have tax benefits C) It is easier to borrow money D) There is increased continuity E) Bills are paid out of pocket Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each. 89) Which of the following describes an investor in a business who is liable for some of its debt, but has no active role in its operation? A) General partners B) Unlimited partners C) Master partners D) Limited partners E) Minority partners Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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90) If a business owner needs money for expansion, but does not want to give up sole control over the business, what type of partnership would be best? A) General partnership B) Limited partnership C) Active partnership D) Master limited partnership E) Cooperatives Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each. 91) In which type of ownership is an owner liable for debt, but only based on how much they invested? A) Master limited partnership B) Cooperative C) Limited partnership D) Corporation E) General partnership Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each. 92) What type of partnership allows an organization to sell shares of the partnership to investors on a public market? A) General partnership B) Limited partnership C) Cooperative D) Master limited partnership E) Unlimited partnership Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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93) When a business owner forms a master limited partnership, what responsibilities does the master partner have toward the minority partner(s)?

A) The master partner must provide detailed operating and financial reports.

B) The master partner must allow the partners to decide all major business changes and transactions.

C) The master partner must make all liabilities clear before the partnership is formed.

D) The master partner must give up majority ownership.

E) The master partner must allow the partners to take an active role in the business.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

94) Which of the following is an advantage to joining a cooperative with potential competitors?

A) Increased marketing power B) Limited production power of competitors C) Ease of establishing ownership D) Increased ability to control personal finances E) Increased ability to franchise Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

95) The least common type of partnership is the general partnership.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

96) Low start-up costs and tax benefits are advantages of sole proprietorships.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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97) By law, each general partner is liable for all debts incurred in the name of the partnership.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

98) A sole proprietorship is personally liable for all debt incurred by the business.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

99) Describe three disadvantages of operating a business as a sole proprietorship.

Answer: The disadvantages of sole proprietorships include unlimited liability, lack of continuity, and limited financing options. A sole proprietor is totally responsible for all of the debts of the business and may have to give up personal assets to repay those debts. A sole proprietorship lacks continuity because the business dissolves with the death of the owner.

Finally, sole proprietors have a limited ability to secure financing, relying mostly on their personal resources.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

100) Discuss the advantages and disadvantages of partnerships.

Answer: Advantages of partnerships include their ability to grow with the addition of new talent and money, ease of organization, and independent legal status. Disadvantages are unlimited liability, potential lack of continuity, difficulty of transferring ownership, and little or no guidance for resolving internal conflicts.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

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101) Discuss the role of a general partnership in a small business.

Answer: The most common type of partnership, the general partnership, is similar to a sole proprietorship but is owned by more than one person. Partners may invest equal or unequal sums of money. In most cases, partners share the profits equally or in proportion to their investment. In certain cases, though, the distribution of profits may be based on other things. And sometimes one partner invests all or most of the funds needed for the business but plays no role in its management. This person is usually called a silent partner. Another partner might invest little or nothing but provide all the labor. In this case, the financial investor likely owns all or most the entire business, and the labor partner owns less. But over time, and as specified in a contract, the labor partner gradually gains a growing ownership stake in the business (usually called sweat equity).

Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

102) Discuss why a business owner would form a limited partnership instead of a general partnership.

Answer: General partnerships are among the least popular forms of business. For general partnerships, as for sole proprietorships, unlimited liability is the greatest drawback. Partnerships also share with sole proprietorships the potential lack of continuity. A related disadvantage is difficulty in transferring ownership. No partner may sell out without the consent of the others.

The limited partnership allows for limited partners who invest money but are liable for debts only to the extent of their investments. They cannot, however, take active roles in business operations. A limited partnership must have at least one (or active) partner, mostly for liability purposes. This is usually the person who runs the business and is responsible for its survival and growth.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 3.5: Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and disadvantages of each.

103) Why are lenders most willing to loan to corporations?

A) Continuity and legal status are assured B) Links with owners and founders are established C) Professional management teams can be changed D) Commitment to expansion is readily available E) Brand and marketing strategies can be diversified Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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104) What type of corporation issues stock that is held by only a few people and not available to the public?

A) Limited liability B) Subchapter S C) Public D) Closely held E) Professional Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

105) Which form of business ownership generates the most sales revenue in the United States?

A) Sole proprietorship B) General partnership C) Cooperative D) Corporation E) Limited partnership Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

106) Which type of business is legally considered a separate entity from its owners and is liable for its own debts?

A) Sole proprietorship B) Corporation C) Limited partnership D) Cooperative E) General partnership Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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107) Who are the owners of a corporation? A) Board of directors B) Financial officers C) Stockholders D) Top managers E) Entrepreneurs Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 108) To raise revenue, what can a business issue and sell to those wishing to own some of the organization? A) Bonds B) Profits C) Stocks D) Dividends E) Loans Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 109) What type of company has stock that is widely held and available for sale to the general public? A) Private corporation B) Public corporation C) General partnership D) Limited liability corporation E) Professional corporation Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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110) Which types of corporations are those comprised of doctors, lawyers, or accountants MOST likely to be?

A) Private B) Public C) Subchapter S D) Professional E) Multinational Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

111) Which of the following occurs when two firms combine to create a new company?

A) Acquisition B) Takeover C) Venture D) Divestiture E) Merger Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

112) When income is taxed at the corporate level and on shareholder returns as dividends, what is this situation known as?

A) Dual costs B) Double taxation C) Regulatory costs D) Double ownership E) Financial balancing Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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113) What is the biggest advantage of incorporating?

A) Limited liability B) Increased profits C) Tax advantage D) Increased talent pool E) Limited tender offers Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

114) What is the term for the profits that are distributed to all owners of a corporation?

A) Tender B) Interests C) ESOP D) Dividends E) Yield Answer: D Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

115) What type of ownership is created when a firm buys another outright?

A) Merger B) Acquisition C) Spin-off D) Divestiture E) Institutional Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

35 .

116) Who is responsible for the day-to-day management and overall performance of an organization? A) Officers B) President C) Chief Executive Officer D) Board of Directors E) Vice President Answer: C Difficulty: Easy AACSB: Analytical thinking Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 117) Which of the following occurs when an organization sells part of a business or operation to another corporation so that is can focus more specifically on its core business? A) Merger B) Acquisition C) Divestiture D) Buy out E) Spin off Answer: C Difficulty: Easy AACSB: Analytical thinking Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 118) Why would an organization divest some of its existing business operations? A) To focus more on its core business B) To create new partnerships C) Because the divested business is more valuable as a separate company D) To buy another firm outright E) To create a new company from several smaller ones Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

36 .

119) What is formed when a corporation establishes a trust on behalf of employees for the purpose of buying shares of ownership?

A) Institutional ownership B) Divestiture C) Strategic alliance D) Corporate governance E) Employee stock ownership plan (ESOP) Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

120) In order to exert influence on corporate managers, groups can pool resources to buy huge blocks of stock. These groups are known as A) spin offs.

B) ESOPS. C) joint ventures.

D) institutional investors.

E) strategic alliances.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

121) How can competing firms collaborate on a new enterprise without losing control of their existing firm?

A) Establish a joint venture B) Buy large blocks of the competitor's stock C) Hire a new chief executive office D) Sell off similar operations E) Change the corporate governance of both firms Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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122) Which type of corporation spans national boundaries and is subject to regulation in multiple countries?

A) Publicly held B) Limited liability C) Subchapter S D) Professional E) Multinational Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

123) Which of the following is a unique feature of a multinational corporation?

A) Owners have unlimited financial liability.

B) Owners are taxed like partners.

C) It is considered to be a partnership for tax purposes.

D) Stock is held by only a few people.

E) Stock is traded on the exchanges of several countries.

Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

124) Which of the following is created when a corporation creates a new, independent corporation from the sale of an existing portion of the business?

A) Divestiture B) Spin-off C) Joint venture D) Merger E) Acquisition Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

38 .

125) Which of the following do competitors establish when collaborating on a project that might have mutual gain?

A) Stock options B) A new Board of Directors C) A strategic alliance D) Institutional investors E) A spin-off Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

126) What is the advantage of forming a strategic alliance with a competitor or supplier?

A) Mutual gain B) Increased shares of stock C) The ability to influence the price of stock D) To legally join the two organizations E) The ability to sell a section of the business but still retain control Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

127) Which of the following is the legal principle that says investors in a corporation are liable for the firm's debts only to the limits of their personal investment in it?

A) Tender offer B) Limited liability C) Double taxation D) Governance E) Merger Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

39 .

128) Which of the following is the offer to buy shares directly to a target corporation's shareholders, often with the intent to take the corporation over against the will of its managers? A) Limited liability B) Corporate governance C) Strategic alliance D) Tender offer E) Employee stock ownership plan Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 129) Which of the following is organized and operated like a corporation but treated as a partnership for tax purposes? A) Multinational corporation B) Professional corporation C) Limited liability corporation D) Publicly held corporation E) S corporation Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 130) Which of the following determines the role of shareholders, directors, and other managers in making decisions and accountability? A) Board of directors B) Stockholders C) Corporate governance D) Venture capitalists E) Corporate officers Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

40 .

131) Who is responsible for delegating the power to run the day-to-day management of an organization?

A) Shareholders B) Corporate governance C) Chief executive officer D) Board of directors E) Officers Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

132) A limited liability corporation is a hybrid of a publicly held corporation and a partnership.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

133) Corporations enjoy significant tax benefits when compared to sole proprietorships or partnerships.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

134) An S corporation has stock that is widely held and available for sale to the general public.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

41 .

135) The board of directors of a corporation reports to the officers of the corporation.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

136) An organization's president is usually responsible for the overall performance of the firm.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

137) An employee stock ownership plan allows employees to join together and influence corporate managers and how they run the company.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

138) A joint venture occurs when partners share ownership of a new enterprise.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

139) A strategic alliance is formed when two or more organizations collaborate on a project for mutual gain.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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140) Explain limited liability in a corporation. Answer: Limited liability is the legal principle holding investors liable for a firm's debts only to the limits of their personal investment in it.

The biggest advantage of corporations is limited liability. Investor liability is limited to personal investment (through stock ownership) in the corporation. In the event of failure, the courts may seize and sell a corporation's assets but cannot touch the investors' personal possessions. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 141) Explain a tender offer. Answer: A tender offer is an offer to buy shares made by a prospective buyer directly to a corporation's shareholders. A corporation can be taken over against the will of its managers through a tender offer. A tender offer is an offer to buy shares made by a prospective buyer directly to a corporation's shareholders, who then make individual decisions about whether to sell. Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership. 142) A corporation must be managed on the principles of corporate governance. Explain what this is. Answer: Corporate governance is the role of shareholders, directors, and other managers in corporate decision making and accountability. This governance is established by a firm's bylaws and usually involves stockholders, the board of directors, and officers. Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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143) Explain the role of a corporation's board of directors.

Answer: The board of directors is responsible for communicating with shareholders and other stakeholders and for setting financial policy on issues such as dividends, major spending, and executive compensation. The board is legally responsible and accountable for corporate actions.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

144) Discuss the advantages and disadvantages of corporations.

Answer: The advantages include limited liability, continuity, and the ability to raise money.

Among the disadvantages are transferring ownership such as through a tender offer, higher startup costs, and double taxation. The biggest advantage of incorporation is limited liability. Investor liability is limited to personal investment (through stock ownership) in the corporation. The biggest disadvantage of incorporation is double taxation.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

145) Describe the three distinct bodies of corporate governance that are specified in a corporation's bylaws.

Answer: Stockholders are the owners of a corporation who buy shares of ownership. The board of directors is a group of people elected by stockholders to oversee the management of the corporation. Corporate officers are top managers hired by the board to run the corporation on a day-to-day basis. Corporate governance covers the roles of shareholders, directors, and other managers in corporate decision making and accountability.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Synthesis LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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146) Explain the difference between mergers and acquisitions and why they are important forms of corporate strategy.

Answer: In an acquisition, one firm buys another outright. Many deals that are loosely called mergers are really acquisitions. This is because one of the two firms will usually control the newly combined ownership. In general, when the two firms are roughly the same size, the combination is usually called a merger even if one firm is taking control of the other. When the acquiring firm is substantially larger than the acquired firm, the deal is really an acquisition. Socalled mergers and acquisitions are an important form of corporate strategy. They let firms increase product lines, expand operations, go international, and create new enterprises.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

147) Discuss the difference among a divestiture, a merger and acquisition, and a spin-off.

Answer: One important set of issues includes mergers, acquisitions, divestitures, and spin-offs.

Mergers and acquisitions involve the legal joining of two or more corporations. A divestiture occurs when a corporation sells a business operation to another corporation; with a spin-off, it creates a new operation.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Synthesis LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

148) Describe the difference between a joint venture and a strategic alliance.

Answer: In a strategic alliance, two or more organizations collaborate on a project for mutual gain. When partners share ownership of what is essentially a new enterprise, it is called a joint venture. The number of strategic alliances has increased rapidly in recent years on both domestic and international fronts. For example, General Motors and Ford recently announced a new strategic alliance to jointly develop 10-speed transmissions for automobiles. Ford also has a research-and-development joint venture with Volkswagen that is focused on electric and autonomous vehicles.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Synthesis LO: 3.6: Describe corporations, discuss their advantages and disadvantages, and identify different kinds of corporations; explain the basic issues involved in managing a corporation and discuss special issues related to corporate ownership.

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Business Essentials, 13e (Ebert/Griffin) Chapter 4 Understanding the Global Context of Business 1) What are products that are created abroad and then transported and sold domestically? A) Dumped goods B) Exports C) Imports D) Buy backs E) Domestic goods Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances. 2) What are products that are created domestically and transported for sale abroad? A) Dumped goods B) Exports C) Imports D) Buy backs E) Domestic goods Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances. 3) Which country is the world's largest marketplace and most stable economy? A) The United States B) Canada C) Germany D) Japan E) China Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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4) Which country in the Pacific Asia region has one of the world's largest economies?

A) South Korea B) China C) Indonesia D) Japan E) Taiwan Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

5) Which organization was developed to promote economic and cultural cooperation among Asian countries?

A) ASEAN B) UAS C) EU D) NAFTA E) ECOWAS Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

6) Which organization classifies countries based on per capita income to make distinctions among countries?

A) The World Bank B) The World Trade Organization C) The International Monetary Fund D) The European Union E) The General Agreement on Tariffs and Trade Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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7) Under which of the following treaties are Canada, the United States, and Mexico gradually eliminating tariffs and all other trade barriers?

A) The EURO Agreement B) The Pan-American Agreement C) The North American Free Trade Agreement D) The General Agreement on Tariffs and Trade E) The G-3 Free Trade Agreement Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

8) Which organization was founded in 1967 for economic, political, social, and cultural cooperation in the Asia Pacific region?

A) SEATO B) ASEAN C) CENTO D) OAS E) WTO Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

9) Which of the following resulted from NAFTA? A) Companies from other countries, such as Japan, have made fewer business investments in North America.

B) U.S. exports to Mexico have decreased.

C) Mexican imports to the United States have increased.

D) More jobs have been created than what was originally predicted.

E) More U.S. jobs were eliminated than what was originally predicted.

Answer: C Difficulty: Difficult AACSB: Application of knowledge Question Category: Analytical LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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10) Which of the following treaties sought to eliminate trade barriers such as tariffs and quotas for most of the world's countries? A) United Nations Development Assistance Plan B) North American Free Trade Agreement C) General Agreement on Tariffs and Trade D) General Agreement on Trade in Services E) European Union Stability and Growth Pact Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances. 11) How does globalization of business benefit shareholders of an organization? A) Through easier and faster international travel B) Through the elimination of diseases in developing nations C) Through improved profitability D) Through lower taxes between trade partners E) Through more distinct cultural heritage Answer: C Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances. 12) Which of the following was believed to play a key role in the shift of production from Mexico to China? A) Increases in Mexico's cost of living and wages B) Modernization of facilities in China C) Improved international travel abilities D) Increases in China's cost of living and wages E) Higher levels of education and professional jobs in Mexico Answer: A Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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13) Which of the following is the process through which the world economy is becoming a single, interdependent system?

A) Globalization B) Foreign investment C) Expansionism D) Imports E) Tariffs Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

14) A local, independent coffee shop sells all their products in the store, and does not sell any items over the Internet. In which way can globalization effect their business?

A) The creation of advertising to attract new customers B) Fluctuation in exchange rates affecting the price of coffee beans C) Changes in the product offering to meet the demand of consumers D) The hiring of part-time labor E) The rate of pay provided to all employees Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

15) In addition to improved business profitability, which of the following is a benefit of globalizations for businesses and shareholders?

A) Less government control B) Each of transferring one successful product to overseas markets C) Improved standards of living D) Ability to keep up with competitors E) Improved opportunity to eliminate small competitors and suppliers Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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16) Which of the following is an argument against globalization?

A) Increased international travel B) Poor communication skills in developing nations C) Cheaper products D) Exploitation of workers E) Products are produced faster than ever before Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

17) The World Bank uses per capita income to make distinctions based on wealth. Which of the following economic distinction level would be those which are considered to be developing countries?

A) High-income B) Upper-middle-income C) Middle-income D) Low-middle-income E) Low-income Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

18) Which of the following established an integrated economic system between countries in order to increase its importance in the world market?

A) The Middle East B) Ireland, Scotland, England, and Wales C) The United States, Mexico, and Canada D) The European Union E) Eastern Europe Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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19) Which of the following describes the basic purpose of NAFTA? A) To create more jobs in Mexico B) To increase exports from the United States to Mexico C) To create a more active and unified North American market D) To increase exports from the United States to Canada E) To eliminate tariffs on imports between all member nations Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

20) Which of the following was created to help member nations negotiate trade agreements and resolve disputes about trade policies and practices?

A) General Agreement on Tariffs and Trade B) World Trade Organization C) Association of Southeast Asian Nations D) The European Union E) The World Bank Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

21) In addition to establishing fair procedures for resolving disputes, and promoting multilateral negotiations, which of the following is one of the primary objectives of the World Trade Organization?

A) Reducing the number of low-income countries B) Eliminating labor abuses C) Creating uniform trade barriers affecting member groups D) Reducing trade barriers such as quotas E) Encouraging fair-trade practices Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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22) An import is a product made or grown abroad but sold domestically.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

23) The World Trade Organization (WTO) was created to encourage international trade.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

24) Globalization refers to the process by which countries around the world are becoming more self-sufficient.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

25) NAFTA regulates trade between the United States, Europe, and Japan.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

26) The purpose of the General Agreement on Tariffs and Trade is to reduce trade barriers.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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27) The primary purpose of the World Trade Organization is to impose tariffs on imported products.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

28) One outcome of globalization is the exploitation of workers in less developed countries.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

29) The world's economy generally revolves around three major marketplaces which are all relatively more of the high-middle income nations.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

30) Discuss the importance and benefits of globalization and international trade on organizations.

Answer: Small firms with no international operations (for example, an independent coffee shop) may still buy from international suppliers, and even individual contractors or selfemployed people can be affected by fluctuations in exchange rates. International trade is becoming increasingly important to most nations and their businesses. Many countries that once followed strict policies to protect domestic business now encourage trade just as aggressively.

They are opening borders to foreign businesses, offering incentives for domestic businesses to expand internationally, and making it easier for foreign firms to partner with local firms.

Likewise, as more industries and markets become global, so, too, are the firms that compete in them.

Several forces have combined to spark and sustain globalization. For one thing, governments and businesses are more aware of the benefits of globalization to businesses and shareholders. These benefits include the potential for higher standards of living and improved business profitability.

New technologies have made international travel, communication, and commerce faster and cheaper than ever before. Finally, there are competitive pressures: Sometimes a firm must expand into foreign markets simply to keep up with competitors.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

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31) Discuss arguments against globalization.

Answer: Globalization is not without its detractors. Some critics charge that globalization allows businesses to exploit workers in less developed countries and bypass domestic environmental and tax regulations. For example, businesses pay workers in Vietnam and Indonesia lower wages than their counterparts in the United States. Factories in China are not subject to the same environmental protection laws as are firms in Europe. And businesses that headquarter their corporate offices in the Cayman Islands pay lower taxes. Critics also charge that globalization leads to the loss of cultural heritages and often benefits the rich more than the poor. For instance, as the English language becomes increasingly widespread throughout the world, some local languages are simply disappearing. Similarly, local residents in Africa receive relatively few economic benefits when oil or precious minerals are discovered on their land; prosperous investors buy the rights from landowners, who often don't realize the value of these resources.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.1: Discuss the rise of international business and describe the major world marketplaces, trade agreements, and alliances.

32) Which of the following is the name for the economic value of all of the products that a country exports minus the economic value of its imports?

A) Balance of foreign competition B) Balance of domestic competition C) Balance of trade D) Balance of payments E) Balance of supply and demand Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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33) Which of the following refers to the situation when a country's imports exceed its exports?

A) Balance of payments B) Balance of trade C) Trade deficit D) Trade surplus E) Trade advantage Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

34) Which of the following is the name for the overall flow of money into or out of a country?

A) Exchange rate B) Trade rate C) Balance of exchange D) Balance of payments E) Balance of trade Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

35) With which type of exchange rate does the value of a country's currency remain constant relative to that of another country?

A) Floating B) Indexed C) Fixed D) Adjusted E) Deflated Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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36) When the value of one country's currency relative to that of another varies with market conditions, which of the following exists? A) Floating exchange rate B) Fixed exchange rate C) Indexed exchange rate D) Flat exchange rate E) Balanced exchange rate Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment. 37) Which of the following BEST describes a positive trade balance? A) The economic condition in which a country's exports exceed its imports B) The economic condition in which a country's imports exceed its exports C) The economic condition in which a country's inflow of money exceeds its outflow D) The economic condition in which a country's outflow of money exceeds its inflow E) The economic condition in which a country's natural resources exceed its human resources Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment. 38) The value of the U.S. dollar relative to the value of the British pound fluctuates with market conditions. What is this type of exchange rate? A) Floating B) Fixed C) Indexed D) Adjusted E) Monitored Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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39) Which of the following exists when a country can produce something that is cheaper or of higher quality than any other country can? A) Monopolistic advantage B) National competitive advantage C) Resource advantage D) Absolute advantage E) Comparative advantage Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment. 40) National competitive advantage derives from four conditions, one of which is factor conditions. What do factor conditions include? A) Customers, suppliers, and labor B) Government quotas and subsidies C) Product quality, productivity, and profits D) Labor, capital, entrepreneurs, and physical resources E) Strategies, structures, and rivalries Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment. 41) What typically happens to a country's balance of trade as the value of its currency falls? A) It improves B) It declines C) It remains the same D) It fluctuates drastically E) It fluctuates moderately Answer: A Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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42) What is the result when a country can produce goods more efficiently or better than other nations?

A) Balance of trade deficit B) Absolute advantage C) Increased globalization D) Comparative advantage E) National competitive advantage Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

43) Changes in which condition is needed to gain a national competitive advantage that includes a large domestic consumer base that promotes use of innovative products?

A) Factor conditions B) Strategies and structures C) Demand conditions D) Rivalries E) Related and supporting industries Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

44) Which is the common currency for nations who are members of the European Union?

A) Yen B) Euro C) Dollar D) Pound E) Peso Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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45) Why did the European Union develop the euro as its common currency?

A) To better compete with the U.S. dollar B) To improve the integration of the economic system between member countries C) To be able to outsource work to countries where wages are lower D) To integrate a quality standard of production between member countries E) To speed the issue of payment between member and nonmember countries Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

46) In addition to balance of trade, what do economist use to measure whether an overall balance exists between imports and exports?

A) Balance of payments B) Trade deficit C) Exchange rates D) Competitive advantage E) Comparative advantage Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

47) Which of the following is one of the biggest concerns about trade balances?

A) Exchange rates B) Flow of currency C) Trade surpluses D) Interest rates E) National competitive advantage Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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48) When a country exports more than it imports, which of the following is created?

A) Fixed exchange rates B) Trade blocks C) Trade surplus D) Negative balance of trade E) Trade deficit Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

49) While on a trip to Japan, Mary went to an ATM to withdraw cash. However, she did not receive the one hundred U.S. dollars she thought she would. Which of the following determines the amount of currency Mary can exchange for the currency of another country?

A) Exchange rate B) Balance of payments C) Interest rates D) Trade surplus E) Globalization Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

50) The value of the U.S. dollar has declined when compared to the Euro. Which of the following is the likely outcome for U.S. firms who ship products to the European Union?

A) Competitors in the European Union will be less likely to open facilities in the U.S. B) There should be a boost in exports from the U.S. C) The balance of trade will stabilize D) There should be a boost in imports to the U.S. E) The European Union will have an absolute advantage over U.S. firms Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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51) When an organization has related and supporting industries, suppliers, and customers within its home country, which of the following is created?

A) Trade deficit B) Absolute advantage C) National competitive advantage D) Free trade E) Comparative advantage Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

52) Which of the following refers to firms and industries that stress cost reduction, product quality, higher productivity, and innovative products?

A) Factor conditions B) Strategies, structures, and rivalries C) Related and supporting industries D) Demand conditions E) Physical resources Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

53) If the United States exports more to the Netherlands than it imports from the Netherlands, the United States has a trade deficit with the Netherlands.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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54) Today, fixed exchange rates are the norm for most major nations of the world.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

55) A comparative advantage exists when a country can produce something more cost effectively and/or of higher quality than any other country.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

56) The single largest trading partner of the United States is China.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

57) Small trade imbalances are common and unimportant.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

58) The United States has large trade deficits with Japan, China, and Mexico. This means that the United States has imported more from those countries than what they have purchased from the United States.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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59) Describe how balance of trade and balance of payments work and define both terms.

Answer: A country's balance of trade is the total economic value of all the products that it exports minus the economic value of all the products that it imports. Balance of payments refers to the flow of money into and out of a country, mostly attributed to the country's balance of trade. The money that a country pays for imports and receives for exports–its balance of trade– accounts for much of its balance of payments. Other financial exchanges are also factors.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

60) In which way does competitive advantage affect balance of trade?

Answer: Because no country can produce everything that it needs, countries tend to export what they can produce better or less expensively than other countries and use the proceeds to import what they can't produce as effectively. This principle doesn't fully explain why nations export and import what they do. Such decisions hinge partly on the advantages that a particular country enjoys regarding its abilities to create or sell certain products and resources. Economists traditionally focused on absolute and comparative advantage to explain international trade. But because this approach focuses narrowly on such factors as natural resources and labor costs, a more contemporary view of national competitive advantage has emerged.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

61) Explain a floating exchange rate.

Answer: A floating exchange rate allows the value of one country's currency relative to the value of another country's currency to fluctuate according to market conditions. On a daily basis, exchange rates fluctuate very little. Significant variations usually occur over longer time spans.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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62) Why should companies conducting international operations be concerned about exchange rate fluctuations?

Answer: Changes in exchange rates affect overseas demand for their products and can be a major factor in international competition. Exchange rate fluctuations can also affect the companies' profitability. In general, when the value of a country's currency rises—becomes stronger—companies based there find it harder to export products to foreign markets and easier for foreign companies to enter local markets. It also makes it more cost-efficient for domestic companies to move operations to lower-cost foreign sites. When the value of a currency declines—becomes weaker—the opposite occurs.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Synthesis LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

63) Explain why fluctuations in exchange rates have significant influence on the balance of trade.

Answer: When the value of a country's currency rises, companies based there find it harder to export products to foreign markets and easier for foreign companies to enter local markets. As the value of a country's currency falls, its balance of trade usually improves because domestic companies should experience a boost in exports. There may be less reason for foreign companies to ship products into the domestic market or to establish operations in other countries.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Analytical LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

64) Discuss the differences between absolute advantage and comparative advantage.

Answer: An absolute advantage exists when a country can produce something more cheaply and/or of higher quality than any other country. Absolute advantages are relatively rare. A country has a comparative advantage in goods that it can produce more efficiently than other goods. Economists traditionally focused on absolute and comparative advantage to explain international trade. But because this approach focuses narrowly on such factors as natural resources and labor costs, a more contemporary view of national competitive advantage has emerged.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Analytical LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment.

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65) What are the four components of national competitive advantage? Answer: The four components of national competitive advantage are factor conditions; demand conditions; related and supporting industries; and strategies, structures, and rivalries. When all attributes of national competitive advantage exist, a nation is likely to be heavily involved in international business. Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 4.2: Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment. 66) Which of the following organizations is a firm that makes products in one country and then distributes and sells them in others? A) Importer B) Exporter C) Multinational firm D) International firm E) Direct foreign investor Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

67) Which of the following buys products in foreign markets and then sells them for resale in its home country? A) Importer B) Exporter C) Multinational firm D) International firm E) Direct foreign investor Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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68) Which of the following will allow one firm to use another firm's brand name, operating procedures or technology?

A) A foreign direct investment B) A licensing arrangement C) A branch office setup D) A strategic alliance E) An import-export relationship Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

69) Which of the following helps to create a more visible public presence in foreign countries and customers?

A) Developing a strategic alliance B) Outsourcing C) Licensing products D) Investing directly in a foreign venture E) Opening a local branch office Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

70) Which of the following denotes the international organization strategy of finding a partner in the country in which a company would like to conduct business?

A) Opening a branch office B) Developing a strategic alliance C) Forming an independent agency D) Outsourcing E) Investing directly in a foreign venture Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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71) Ford, an American car company, purchased Volvo, which is based in Sweden. What is this an example of?

A) A franchise B) An independent agency C) A licensing arrangement D) A foreign direct investment E) A strategic alliance Answer: D Difficulty: Easy AACSB: Reflective thinking Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

72) Which of the following design, produce, and manufacture products in many nations?

A) Multinational firms B) Importing firms C) Domestic firms D) International firms E) Exporting firms Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

73) Which of the following provides exclusive rights to produce a product for another firm?

A) Licensing agreements B) Strategic alliance C) Foreign direct investment D) Independent agent E) Branch office Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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74) Which of the following types of payments are usually received by an exporter as an ongoing payment calculated as a percentage of the license holder's sales?

A) Flat fees B) Royalties C) Agent fees D) Subsidies E) Direct investments Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

75) In which international organization structure does a firm have greatest control over foreign activities than agents and licensees?

A) Exporting arrangements B) Strategic alliances C) Importing arrangements D) Joint ventures E) Branch offices Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

76) What is a difference between an international firm and a multinational firm?

A) Multinational firms design, produce, and market products in many nations, whereas international firms are based primarily in one nation.

B) International firms design, produce, and market products in many nations, whereas multinational firms are based primarily in one nation.

C) International and multinational firms are the same thing.

D) Multinational firms are concerned primarily with foreign markets, whereas international firms are concerned primarily with the domestic market.

E) International firms are concerned primarily with foreign markets, whereas multinational firms are concerned primarily with the domestic market.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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77) The practice of using suppliers in foreign countries to perform business processes that were previously done in the United States is called A) licensing.

B) adapting.

C) offshoring.

D) exporting.

E) importing.

Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

78) What is the advantage for a business that uses offshoring in their manufacturing process?

A) Decreased costs B) Improved quality C) Decreased production time D) Increased employee moral E) Decreased employee turnover Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

79) Which of the following allows firms to focus on core activities or reduce cost by moving aspects of the business to areas where costs are low?

A) Outsourcing B) Adapting C) Licensing D) Exporting E) Importing Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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80) Gnomatics has made the decision to sell their product abroad and they know their products are in demand in several international markets. Which of the following does Gnomatics have to decide before they begin selling to foreign customers?

A) How to outsource the product to the foreign customers B) Whether Gnomatics should be the importer or exporter of the product C) How to adapt the product to meet the special demands of foreign customers D) Where to open branch offices E) The amount of foreign direct investment needed before selling to foreign customers Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

81) Which of the following describes a firm that conducts a meaningful portion of its business in foreign countries?

A) Domestic B) Licensed C) International D) Independent E) Multinational Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

82) Before selling to the international market, Gnomatics wanted to ensure their company was protected in foreign markets. To do so, they hired people to act as sales representatives, to collect payments, and to ensure the customers are satisfied. Which of the following did Gnomatics hire?

A) Independent agents B) Foreign offices C) Strategic partners D) Owners of branch offices E) Franchisee Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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83) Which of the following is the outcome of a company finding a foreign partner to contribute approximately half of the resources needed to establish and operate a new business in the partner's country?

A) Foreign direct investment B) Strategic alliance C) Branch office D) Licensing agreements E) Independent agent relationship Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

84) In a licensing arrangement, firms give organizations exclusive rights to manufacture their products in another country in return for a fee plus royalties.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

85) Transportation costs have relatively little impact on a domestic firm's decision to go international when compared to other possible factors.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

86) International firms conduct a good deal of their business abroad and may even maintain overseas manufacturing facilities.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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87) Because the world's economy is becoming more globalized, fewer firms need to expand international operations.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

88) Different levels of international involvement entail different kinds of organizational structures.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

89) Strategic alliances give firms greater control over foreign activities than do agents and licensees.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

90) A company with high demand for its product in a particular foreign market that is associated with high transportation costs would tend to arrange a strategic alliance over any other international organization structure.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

91) When working with international partners, the terms outsourcing and offshoring are often used interchangeably.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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92) What are three basic levels of involvement available for a firm that decides to conduct business internationally?

Answer: The firm may act as an exporter or importer, organize as an international firm, or operate as a multinational firm. Most of the world's largest industrial firms operate as multinational firms-firms that design, produce, and market products in many nations.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

93) Explain how a firm may have more direct control with a branch office than it does over agents or license holders.

Answer: In a branch office, a firm sends its own managers overseas where there is more visible public presence. Branch offices also furnish a more visible public presence in foreign countries, and foreign customers tend to feel more secure when there's a local branch office.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

94) Define licensing arrangement and strategic alliance and discuss their relative merits.

Answer: With a licensing arrangement, a firm gives foreign entities exclusive rights to manufacture or market their products in that market. With such arrangements, the licensing firm is not often present to monitor that production and quality control standards are consistently being met. Such arrangements, which include franchising, might benefit the licensing firm in that the local people likely know the local market best; therefore, a licensing arrangement would allow the licensing firm to tap into a foreign market via the use of employees who share cultural similarities with that particular market. In a strategic alliance, a firm comes together in a form of a partnership with a firm in a country in which it wants to do business. Both sides agree to invest resources and capital into a new business or toward a common purpose. This type of partnership represents a type of "marriage" between two firms and both sides are present while major decisions are being made and both sides work toward their common purpose.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

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95) Discuss the importance of adapting to the needs of the customer when deciding to expand internationally.

Answer: If its product is in demand, a firm must decide whether and how to adapt it to meet the special demands of foreign customers. For example, to satisfy local tastes, McDonald's sells wine in France, beer in Germany, gazpacho in Spain, and some vegetarian sandwiches in India.

Likewise, consumer electronics companies have to be aware that different countries use different kinds of electric sockets and different levels of electric power. Therefore, regardless of demand, customer needs must still be considered.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 4.3: Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

96) What is the shared system of symbols, beliefs, and values of a country known as?

A) Organizational structure B) Culture C) Rules D) Norms E) Leadership Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

97) Which of the following indicates the belief people hold about differences in hierarchies and authority in an organization?

A) Individualism B) Social orientation C) Collectivism D) Power orientation E) Uncertainty orientation Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

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98) Those cultures that place a higher value on social relationship, quality of life, and concern for others instead of money and assertiveness have which type of orientation behavior? A) Uncertainty avoidance B) Aggressive goal C) Time D) Passive goal E) Power tolerance Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business. 99) Which of the following is a person's belief about the importance of an individual compared to the importance of a group? A) Social orientation B) Power orientation C) Uncertainty orientation D) Goal orientation E) Time orientation Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business. 100) What type of societies tends to prefer reward systems that link pay with performance of individual employees? A) Collectivist B) Power respect C) Power tolerance D) Uncertainty avoidance E) Individualistic Answer: E Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 4.4: Explain the role and importance of the cultural environment in international business.

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101) Which of the following is an indication that people accept the authority of superiors simply because of their position in the organization? A) Power respect B) Power tolerance C) Power acceptance D) Power uncertainty E) Uncertainty avoidance Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business. 102) Which of the following can be greatly influenced by having a deep understanding of the cultural environment and how it affects business? A) The success or failure of international business activity B) The ability to establish strategic alliances C) The total value of foreign direct investments D) The decision as to whether a firm should pursue licensing arrangements or licensing agreements E) The ability to move from an international firm to become a multinational firm Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business. 103) Which of the following supports the idea that the person comes first, not the group? A) Individualism B) Collectivism C) Uncertainty acceptance D) Long-term outlook E) Short-term outlook Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

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104) Teresita doesn't mind helping her team members in completing the project, even though she is busy on another project right now. She knows that if the group does well, everyone in the group will look good. Which of the following dimension of culture does Teresita's actions support?

A) Passive goal behavior B) Power respect C) Uncertainty avoidance D) Short-term outlook E) Collectivism Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

105) Dezmon works at a company with an open office, and everyone is encouraged to question, challenge, and build on ideas of others in the organization, even their managers. Which of the following does Dezmon's workplace place more significance on?

A) Uncertainty orientation B) Goal orientation C) Passive goal behavior D) Power tolerance E) Long-term outlook Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

106) Scott thrives on change and new opportunities. He works best in organizations with high degrees of A) social orientation B) power orientation C) uncertainty orientation D) goal orientation E) time orientation Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

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107) When Andrew is given an assignment, he wants to fully understand the goals and steps in the process. He does not like, or work well in situations with high levels of ambiguity. Which of the following is the cultural dimension that describes Andrew's working style?

A) Aggressive goal behavior B) Uncertainty avoidance C) Short-term outlook D) Power respect E) Collectivism Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

108) Which of the following is the extent to which members of a culture adopt a long-term versus short-term outlook on work, life, and other elements of society?

A) Power orientation B) Time orientation C) Goal orientation D) Social orientation E) Uncertainty orientation Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

109) Some people place a higher value on material possession, money, and assertiveness. Which of the following is a cultural dimension that reflects these attitudes?

A) Short-term outlook B) Aggressive goal behavior C) Power respect D) Collectivism E) Uncertainty avoidance Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

110) Having a deep understanding of culture can be a major factor in the success or failure of a business.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

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111) Even when two cultures are similar, cultural factors can sometimes cause problems for managers.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

112) Cultural differences between countries can have a direct impact on business practices.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

113) Cultural values and beliefs are often unspoken.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.4: Explain the role and importance of the cultural environment in international business.

114) Discuss the five dimensions of social behavior that differ across cultures.

Answer: The first dimension is social orientation. Social orientation is a person's beliefs about the relative importance of the individual versus groups to which that person belongs. The two extremes of social orientation are individualism and collectivism. A second important dimension is power orientation, the beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations. Some cultures are characterized by power respect. This means people tend to accept the power and authority of their superiors simply on the basis of their position in the hierarchy and to respect their right to hold that power. Third, uncertainty orientation is the feeling individuals have regarding uncertain and ambiguous situations. People in cultures with uncertainty acceptance are stimulated by change and thrive on new opportunities. The fourth dimension of cultural values is goal orientation. In this context, goal orientation is the manner in which people are motivated to work toward different kinds of goals. One extreme on the goal orientation continuum is aggressive goal behavior. A fifth dimension is called time orientation. Time orientation is the extent to which members of a culture adopt a long-term versus a short-term outlook on work, life, and other elements of society.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

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115) Discuss the impact of culture on motivation.

Answer: Managers in international business also have to understand that there are differences in what motivates people in different cultures. Although it's impossible to predict exactly how people from different cultures will react in the workplace, some insights have been developed from research on individual behaviors and attitudes across different cultures.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 4.4: Explain the role and importance of the cultural environment in international business.

116) In some South American countries, it is sometimes legal to bribe other businesses and government officials, while this practice is illegal in the United States. Which of the following refers to this type of policy?

A) Protectionism B) Business practice laws C) Free trade agreements D) Fair trade agreements E) Local content laws Answer: B Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

117) China and India require that when foreign firms enter into joint ventures with local firms, the local partners must have the controlling ownership stake. What is this an example of?

A) Local content laws B) Business practice laws C) Fair trade agreements D) Quotas E) Subsidies Answer: A Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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118) In Germany, Walmart has been required to buy existing retailers rather than open brandnew stores. What does this illustrate?

A) Local content laws B) Fair trade agreements C) Free trade agreements D) Licensing arrangements E) Business practice laws Answer: E Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

119) Which of the following denotes a government order forbidding exportation and/or importation of a particular product from a particular country?

A) Tariff B) Embargo C) Subsidy D) Local content law E) Business practice law Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

120) Which of the following is a government payment to help a domestic business compete with foreign firms?

A) Revenue tariff B) Protectionist tariff C) Import buy-back D) Export rebate E) Subsidy Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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121) Which of the following denotes the practice of protecting domestic business at the expense of free market competition?

A) Fair trade B) Balanced trade C) Free trade D) Market liberalism E) Protectionism Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

122) Many governments require that products sold in their particular country be at least partly made there. This policy involves what type of laws?

A) Quota laws B) Local content laws C) Business practice laws D) Free trade laws E) Subsidy laws Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

123) Which of the following refers to associations of producers that control supply and prices?

A) Independent agencies B) Cartels C) Trade alliances D) Multinational firms E) Trade monopolies Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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124) Which of the following refers to the practice of selling a product abroad for less than the cost of production? A) Exporting B) Importing C) Dumping D) Safeguarding E) Offshoring Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business. 125) Which of the following refers to tariffs that are imposed strictly to raise money for the government? A) Revenue tariffs B) Protectionist tariffs C) Quota tariffs D) Subsidy tariffs E) Labor tariffs Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business. 126) Which of the following types of tariff is meant to discourage the import of particular products? A) Revenue tariff B) Quota tariff C) Labor tariff D) Subsidy tariff E) Protectionist tariff Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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127) Suppose the United States requires products sold in the United States be at least 51 percent made in the United States. Which of the following denotes this type of policy?

A) Business practice law B) Deregulation law C) Antidumping laws D) Strategic alliance E) Local content law Answer: E Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

128) Which of the following goals is a primary purpose of tariffs on imports?

A) Maintain domestic competitiveness B) Decrease exports C) Increase imports D) Subsidize domestic industry E) Promote free trade Answer: A Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

129) Which of the following statements BEST describes the effects of subsidies?

A) A subsidy essentially lowers the prices of foreign goods rather than raising the prices of domestic goods.

B) A subsidy essentially raises the prices of domestic goods rather than lowering the prices of foreign goods.

C) A subsidy essentially lowers the prices of domestic goods rather than raising the prices of foreign goods.

D) A subsidy essentially raises the prices of foreign goods while also raising the prices of domestic goods.

E) A subsidy essentially lowers the prices of foreign goods while also lowering the prices of domestic goods.

Answer: C Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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130) Which of the following directly affects the price and quantity of foreign-made products in a country by restricting the amount of product that can be imported? A) Local content law B) Quotas C) Cartels D) Subsidies E) Protectionism Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business. 131) Which of the following represents the controversial practice of supporting domestic businesses at the expense of free market competition? A) Embargos B) Quotas and tariffs C) Protectionism D) Local content law E) Cartels Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business. 132) Even free market economies often establish some system of quotas and/or tariffs. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business. 133) A subsidy is a tax designed to help companies who import products. Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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134) Local content laws guarantee that products sold in a country are at least partly made there.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

135) Revenue tariffs are primarily designed to discourage the importation of foreign products.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

136) Critics of protectionism charge that it drives up prices by reducing competition.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

137) An embargo is a type of quota that forbids the exporting or importing of a particular product from a specific country.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

138) Under U.S. antidumping legislation, what conditions must be met to prove that dumping is being practiced?

Answer: Dumping is the practice of selling a product abroad for less than the cost of production. U.S. antidumping legislation sets two conditions for determining that dumping is being practiced: products are being priced at "less than fair value," and the result unfairly harms a domestic industry. The U.S. government has been known to impose significant tariffs on imports as a means to combat dumping.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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139) How can a local content law in a country act as a barrier to a U.S.-based automobile manufacturing company that is interested in setting up a branch office in that country?

Answer: Success in international trade will depend largely upon social, economic, legal, and political barriers. Any firm planning to conduct business abroad must understand social and cultural differences between the host country and home country. Economic differences include the extent of government involvement in a given industry and the level of competition. There are many legal and political barriers to international trade, including quotas, tariffs, subsidies, local content laws, and business practice laws. Many countries, including the United States, have local content laws—requirements that products sold in a country be at least partly made there. Firms seeking to do business in a country must either invest there directly or take on a domestic partner.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

140) What are the advantages and disadvantages of globalization?

Answer: Globalization has increased the standard of living for billions of people and has helped to create enormous wealth in many different parts of the globe. However, many people have not shared in this wealth and some critics believe that globalization has hurt less developed countries and destroyed or damaged the unique cultures that exist in different parts of the world. In recent years governments and businesses have become more aware of the benefits of globalization to businesses and shareholders, while critics have been more willing to protest or demonstrate at international gatherings of global economic leaders.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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141) Describe the difference between quotas, tariffs, and subsidies as they relate to importing and exporting.

Answer: Even free market economies, such as the that of United States, have some quotas or tariffs, both of which affect prices and quantities of foreign-made products. A quota restricts the number of products of a certain type that can be imported and, by reducing supply, raises the prices of those imports. The ultimate quota is an embargo, a government order forbidding exportation or importation of a particular product–or even all products–from a specific country.

Tariffs are taxes on imported products. They raise the prices of imports by making consumers pay not only for the products but also for tariff fees. Tariffs take two forms: revenue and protectionist. Revenue tariffs are imposed to raise money for governments, but most tariffs, called protectionist tariffs, are meant to discourage particular imports. A subsidy is a government payment to help a domestic business compete with foreign firms. They're actually indirect tariffs that lower the prices of domestic goods rather than raise the prices of foreign goods.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 4.5: Describe some of the ways in which economic, legal, and political differences among nations affect international business.

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Business Essentials, 13e (Ebert/Griffin) Chapter 5 Managing the Business 1) Which of the following participates in the business through analyzing their competitive environments, and plan, organize, direct, and control the operations of their organizations?

A) Stockholders B) Managers C) Regulators D) Agents E) Customers Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

2) Which aspect of the management process involves determining what the organization needs to do and how best to get it done?

A) Organizing B) Planning C) Controlling D) Processing E) Monitoring Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

3) Which function of the management process is used to monitor and ensure the organization is meeting its goals?

A) Planning B) Organizing C) Leading D) Controlling E) Budgeting Answer: D Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

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4) The first main component in the planning process is determining goals. What is the next step?

A) Developing a strategic mission B) Developing a comprehensive strategy C) Developing an array of tactics D) Developing an operational plan E) Developing a functioning budget Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

5) Which description defines the planning function of the management process?

A) Guiding and motivating employees to meet organizational objectives B) Discussing how best to arrange an organization's resources into a coherent structure C) Scanning the business environment for threats and opportunities D) Determining what an organization needs to do and how best to get it done E) Monitoring a firm's performance to make sure that it is meeting its goals Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

6) Which description identifies the organizing function of the management process?

A) Guiding and motivating employees to meet organizational objectives B) Determining how best to arrange an organization's resources into a coherent structure C) Scanning the business environment for threats and opportunities D) Monitoring an organization's performance to ensure that it is meeting its goals E) Determining what an organization needs to do and how best to get it done Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

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7) Comparing actual performance against standards is an example of which function of the management process?

A) Planning B) Organizing C) Leading D) Controlling E) Strategizing Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

8) Which aspect of the leadership process is ultimately responsible for the performance and effectiveness of the teams, divisions, and company?

A) Planning B) Controlling C) Educating D) Management E) Organizing Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

9) Grant is a mid-level manager at PlanCo. He has been given the departmental strategy from his manager and has been directed to work through the planning process for this strategy implementation. Which of the following should Grant do after developing the strategy for PlanCo? A) Create organizational charts to help everyone understand their reporting relationships.

B) Determine how to control the day-to-day operations of the business.

C) Review all resources available within the firm.

D) Design tactical and operational plans for implementation of the strategy.

E) Work to motivate all employees to achieve the goals of the organization.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

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10) Which of the following can help employees understand their roles and reporting relationships within the organization? A) Strategies B) Operational plans C) Organizational charts D) Control standards E) Objectives Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process. 11) Which of the following is part of the leading function within an organization? A) Providing orders to employees and demanding results. B) Monitoring performance to ensure the firm's goals are met. C) Organizing people and resources to build reporting relationships. D) Determining what needs to be done and how to do it. E) Guiding and motivating employees to meet the firm's objectives. Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process. 12) When does the process of controlling begin? A) When performance can be measured B) When standards are established C) When motivating employees D) When organizing work units E) When establishing strategies Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

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13) Which of the following is the primary advantage of education as a source of management skills?

A) Students can follow a well-developed program that addresses current research and thinking.

B) Students can follow a general program that meets the needs of a wide variety of students.

C) Students will not have to focus on specific, hard to obtain knowledge.

D) Students will have an increased appreciation for all aspects of the manager's job.

E) Students will not have to rely on experience after graduation.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

14) What type of management process function is being used when a manager motivates the workforce by rewarding them when standards are achieved?

A) Leading B) Planning C) Organizing D) Marketing E) Strategizing Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

15) When a sales manager compares actual sales to the quarterly sales quota, he or she is performing the controlling function of management.

Answer: TRUE Difficulty: Easy AACSB: Analytical thinking Question Category: Application LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

16) The first step in the control process is to compare actual performance to standards.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

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17) Regardless of the size of the organization, all managers perform many of the same functions and have many of the same responsibilities.

Answer: TRUE Difficulty: Easy AACSB: Analytical thinking Question Category: Application LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

18) Define the term management.

Answer: Management is the process of planning, organizing, leading, and controlling an organization's financial, physical, human, and information resources to achieve its goals.

Typically, a manager's day would involve attention to all these aspects of the role.

Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

19) What can managers do to incorporate a scientific approach to management?

Answer: Many management problems and issues can be approached in ways that are rational, logical, objective, and systematic. Managers can gather data, facts, and objective information.

They can use quantitative models and decision-making techniques to arrive at "correct" decisions. They need to take such a scientific approach to solving problems whenever possible, especially when they are dealing with relatively routine and straightforward issues. Technical, diagnostic, and decision-making skills (which we will discuss later in the chapter) are especially important when approaching a management task or problem from a scientific perspective.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

20) Discuss the art of management and how it is supported by the science of management.

Answer: Managers must blend an element of intuition and personal insight with hard data and objective facts. Even though managers may try to be scientific as often as possible, they must frequently make decisions and solve problems on the basis of intuition, experience, instinct, and personal insights. For example, relying heavily on conceptual, communication, interpersonal, and time-management skills, a manager may have to decide among multiple courses of action that look equally attractive, and even objective facts may prove to be wrong.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

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21) Identify the four basic managerial functions.

Answer: There are four basic managerial functions that managers are responsible for. They are (1) Setting goals is part of planning, (2) setting up the organization is part of organizing, (3) managing people is part of leading, and (4) monitoring performance is part of controlling.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 5.1: Describe the nature of management and identify the four basic functions that constitute the management process.

22) Which type of manager is responsible for implementing the strategies, policies, and decisions made by top managers?

A) First-line manager B) Middle manager C) Supervisory manager D) Office manager E) Financial managers Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

23) Which type of manager spends most of their time working with and supervising the employees who report to them?

A) First-line managers B) Information managers C) Top managers D) Chief executive officers E) Operations managers Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

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24) Which type of business managers have titles such as President and CEO? A) First-line managers B) Top managers C) Middle managers D) Power brokers E) Stockholders Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

25) Which level of management is responsible for the overall performance and effectiveness of the firm?

A) Top managers B) First-line managers C) Middle managers D) Supervisory managers E) Human resource managers Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

26) CFO and controller are titles associated with what type of manager?

A) Financial B) Information C) Human resource D) Marketing E) Operations Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

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27) Which level of management sets general policies, formulates strategies, approves all significant decisions, and represents the company in dealings with other firms and with government bodies?

A) Operations managers B) Production managers C) Top managers D) Middle managers E) First-line managers Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

28) Titles such as plant manager, operations manager, and division manager designate which level of management?

A) First-line managers B) Middle managers C) Top managers D) Supervisors E) Technology managers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

29) The titles of supervisor, office manager, and group leader are examples of which level of management?

A) Top management B) Middle management C) First-line management D) Operations management E) Human resource management Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

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30) Who is responsible for production and quality control?

A) Information managers B) Human resource managers C) First-line managers D) Operations managers E) Marketing managers Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

31) Which managers are directly responsible for getting product information from producers to consumers?

A) Human resource managers B) Public relations managers C) Information managers D) Marketing managers E) Financial managers Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

32) Who is responsible for designing and implementing systems to gather, organize, and distribute facts and data essential for the running of the company?

A) Marketing managers B) Information managers C) Production managers D) Human resource managers E) Research and development managers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

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33) Which managers are responsible for planning and overseeing the firm's accounting functions?

A) Financial managers B) Information managers C) Production managers D) Human resource managers E) Marketing managers Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

34) When top managers set organizational goals, who is primarily responsible for determining how to meet these goals?

A) Middle managers B) Operations managers C) Controllers D) Chief executive officers E) First-line managers Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

35) Joel is managing a sink hole repair. He spends most of his time working with and supervising the employees who report to him, but also interacts with community officials and upper-level management at the home office. Which of the following describes Joel's position?

A) Project manager B) Office manager C) Division manager D) Vice President E) Group leader Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

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36) Which of the following is responsible for the hiring and training of employees, performance evaluation, and compensation strategy for a firm?

A) Information managers B) Project managers C) Financial managers D) Operations managers E) Human resource managers Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

37) Charlie is helping to design a new information system to improve the connectivity of all the divisions and plants. Which of the following describes Charlie's position within the firm?

A) Top manager B) Chief information officer C) First-line manager D) Middle manager E) Controller Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

38) Ahn is the first-line manager in the accounting department at her firm. Which of the following titles might she expect to have?

A) Chief financial offices B) Vice president for finance C) Accounting supervisor D) Division controller E) Accountant Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

39) Operations managers are responsible for production, inventory, and quality control.

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Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

40) Information managers are responsible for getting products from producers to consumers.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

41) Middle managers have considerable autonomy as they work to implement the strategies and goals set by op managers.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

42) Marketing managers work closely with financial managers to oversee accounting functions and financial resources.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

43) Describe and discuss the three levels of management and their roles in the organization.

Answer: A key role of top managers is mentoring and developing those who work for them.

Top managers are responsible for the overall performance and effectiveness of the firm. This is done by setting general policies, formulating strategies and approving all significant decisions.

Top managers also represent the company in dealings with other firms and the government.

Middle managers are responsible for implementing the strategies set by top managers, and working towards those goals. First line managers supervise the work of employees who report to them, and ensure employees understand and are trained in company policies and procedures.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

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44) Describe the role of financial managers in an organization.

Answer: Nearly every company has financial managers to plan and oversee its accounting functions and financial resources. Levels of financial management may include CFO or vice president for finance (top), a division controller (middle), and an accounting supervisor (first-line manager). Some financial institutions, such as Wells Fargo and State Farm Insurance, have even made effective financial management the company's reason for being.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 5.2: Identify different types of managers likely to be found in an organization by level and area.

45) Which type of skills are needed to understand and work well with people in the workplace?

A) Human relations skills B) Technical skills C) Conceptual skills D) Motor skills E) Decision-making skills Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 5.3: Describe the basic roles and skills required of managers.

46) Which of the following refers to a person's ability to think in the abstract, to diagnose and analyze different situations, and to see beyond the present situation?

A) Human relations skills B) Decision-making skills C) Conceptual skills D) Production skills E) Technical skills Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers.

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47) Which type of skills requires defining problems and selecting the best course of action to take? A) Human relations skills B) Production skills C) Conceptual skills D) Decisionmaking skills E) Technical skills Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers. 48) An accountant's ability to audit a company's records is an example of what type of skills? A) Motor skills B) Technical skills C) Human relations skills D) Conceptual skills E) Decision-making skills Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers. 49) What skills can a manager utilize to work well with people and make them feel excited about their work? A) Human relations skills B) Technical skills C) Accounting skills D) Conceptual skills E) Marketing skills Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

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50) Which of the following managers depend most on conceptual skills?

A) First-line managers B) Top managers C) Middle managers D) Marketing managers E) Financial managers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

51) A manager is expected to serve in which interpersonal capacity when coordinating people, groups, and organizations?

A) Figurehead B) Spokesperson C) Leader D) Negotiator E) Liaison Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

52) What type of manager needs to understand foreign markets, cultural differences, and motives of foreign rivals?

A) Technology B) Strategic C) Project D) Interpersonal E) Global Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers.

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53) Fostering new ideas and innovation, and resolving conflicts within a department is a responsibility under which managerial role?

A) Interpersonal B) Resource allocator C) Decisional D) Disturbance handler E) Informational Answer: C Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers.

54) The managerial role characterized by the ability to gather and disseminate communications and areas of interest is referred to as A) interpersonal.

B) resource allocator.

C) decisional.

D) disturbance handler.

E) informational.

Answer: E Difficulty: Easy AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers.

55) Mary is leading a large international project. She has invited her international colleagues to visit her plant so they can better understand how the process will run. While her international colleagues are in town, Mary took them to dinner and has arranged tours of the area for them.

Which of the following describes Mary's role in this situation?

A) Informational B) Decisional C) Entrepreneurial D) Human relational E) Interpersonal Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

17 .

56) After listening to the opinions of her staff, Willa though through a variety of options for the new plant location, and is now ready to share that information with her staff and others in the workplace. Which of the following describes Willa's role in this situation?

A) Entrepreneurial B) Human resources C) Figurehead D) Informational E) Negotiator Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

57) Two of Owen's managers are trying to access the same product line at the same time, each claiming their work is more important. Owen set up a meeting with both managers to try to determine potential solutions. In this scenario, Owen needs to act in the role of A) spokesperson.

B) liaison.

C) disturbance handler.

D) monitor.

E) entrepreneur.

Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

58) Which type of skills are especially important for first-line managers because of the time spent helping solve work-related problems?

A) Human resource B) Technical C) Conceptual D) Time management E) Global Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

18 .

59) James feels he is constantly interrupted by phone calls, making it difficult to get other work done. He has decided to schedule blocks of time when he will return the most important phone calls, allowing him to better concentrate on other work that needs to be done. Which of the following is James using to manage the constant interruption of phone calls?

A) Time management skills B) Decision-making skills C) Global management skills D) Technical skills E) Human relations skills Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

60) Eloise's company has just purchased a company in Spain. Eloise will be relocated from the United States to Madrid for the next three years. Which of the following is an advantage to sending an employee from headquarters to the new international location?

A) To help transfer the corporate culture to the foreign operations.

B) To better prepare other employees for international assignments.

C) To prepare for international competition for key leadership roles.

D) To allow employees to advance within the firm.

E) To identify directors from other countries to serve on the firm's board.

Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

61) Today, information flows to everyone in an organization simultaneously, thanks for improvements in technology and networks. Which of the following is the result of increased use of technology in a firm?

A) Less time spent on emails B) Quicker decision making C) Increased reliance on hierarchies D) Increased bureaucracy E) Less group building and teamwork Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 5.3: Describe the basic roles and skills required of managers.

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62) One outcome of using conceptual skills is being able to select the best alternative.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers.

63) Changes in technology will result in a decrease in the amount of information that managers will use to make decisions.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers.

64) Many managers spend as much as four hours a day in meetings.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers.

65) The effectiveness of managers in using time can be undermined by frequent phone calls.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers.

66) The informational roles of a manager are natural continuations of a manager's interpersonal role.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers.

67) The work of most executives fall into three basic categories: interpersonal, informational, an decisional.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers.

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68) Discuss how new technologies have shaped management communication and decision- making skills. Answer: One significant issue facing tomorrow's managers is technology, especially as it relates to communication. Managers have always had to deal with information. Today, the amount of information has reached staggering proportions.

New forms of technology have added to a manager's ability to process information while simultaneously making it even more important to organize and interpret an ever-increasing wealth of input and to develop effective technology skills. Technology has also begun to change the way the interaction of managers shapes corporate structures. Elaborate networks control the flow of a firm's lifeblood– information. This information no longer flows strictly up and down through hierarchies. It now flows to everyone simultaneously.

As a result, decisions are made quicker, and more people are directly involved. With e-mail, videoconferencing, and other forms of communication, neither time nor distance–nor such corporate boundaries as departments and divisions–can prevent people from working more closely together. More than ever, bureaucracies are breaking down, and planning, decision making, and other activities are beginning to benefit from group building and teamwork. Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers. 69) Identify the four leading causes of wasted time in the workplace as outlined in the text. Answer: The four leading causes of wasted time in the workplace include paperwork, meetings, phone calls, and e-mail. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.3: Describe the basic roles and skills required of managers. 70) Managers have many roles within the organization. Discuss the interpersonal roles of managers and how those roles affect the organization. Answer: Three interpersonal roles are inherent in the manager's job. First, the manager is often expected to serve as a figurehead–taking visitors to dinner, attending ribbon-cutting ceremonies, and the like.

These activities are typically more ceremonial and symbolic than substantive. The manager is also expected to serve as a leader–hiring, training, and motivating employees. A manager who formally or informally shows subordinates how to do things and how to perform under pressure is leading. Finally, managers can have a liaison role. This role often involves serving as a coordinator or link among people, groups, or organizations. Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers.

21 .

71) Identify and explain the four types of decisional roles and the function of each role.

Answer: The information acquired by the manager as a result of performing the informational roles has a major bearing on important decisions that he or she makes. There are four decisional roles. First, the manager has the role of entrepreneur, the voluntary initiator of change. A second decisional role is initiated not by the manager but by some other individual or group. The manager responds to her role as disturbance handler by handling such problems as strikes, copyright infringements, or problems in public relations or corporate image. The third decisional role is that of resource allocator. As resource allocator, the manager decides how resources are distributed and with whom he or she will work most closely. A fourth decisional role is that of negotiator. In this role, the manager enters into negotiations with other groups or organizations as a representative of the company. Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers. 72) Identify and explain the important of human relations skills for managers. Answer: Effective managers also generally have good human relations skills, skills that enable them to understand and get along with other people. A manager with poor human relations skills may have trouble getting along with subordinates, cause valuable employees to quit or transfer, and contribute to poor morale. Although human relations skills are important at all levels, they are probably most important for middle managers, who must often act as bridges between top managers, first-line managers, and managers from other areas of the organization.

Managers should possess good communication skills. Many managers have found that being able both to understand others and to get others to understand them can go a long way toward maintaining good relations in an organization. Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 5.3: Describe the basic roles and skills required of managers. 73) Which of the following identifies performance targets used by organizations and their managers to measure success or failure at every level? A) Tactics B) Goals C) Strategies D) Mission statements E) Promotions Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

22 .

74) If an organization sets out to increase its share of the snack food market by 10 percent during the next eight years, what kind of goal is the organization setting?

A) A short-term goal B) An intermediate goal C) A tactical goal D) A long-term goal E) An organizational goal Answer: D Difficulty: Easy AACSB: Reflective thinking Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

75) When the finance department has a goal of a 3 percent increase in return on investment in three years, what type of goal is the organization setting?

A) A long-term goal B) A tactical goal C) A short-term goal D) An intermediate goal E) An organizational goal Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

76) What strategic management activity do company managers undertake so they can later measure success or failure at every organizational level?

A) Planning tactics B) Setting goals C) Devising strategies D) Auditing skills E) Publicizing promotions Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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77) What of the following indicates an organization's reason for being?

A) Strategy B) Tactic C) Purpose D) Diversity E) Profitability Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

78) Which of the following BEST describes a mission statement?

A) An objective that a business hopes and plans to achieve B) A broad set of organizational plans for implementing decisions made for achieving organizational goals C) The shared experiences, stories, beliefs, and norms that characterize an organization D) An organization's statement of how it will achieve its purpose in the environment in which it conducts business E) An organization's competitive standing in the marketplace Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

79) Which of the following BEST describes a business strategy?

A) A strategy for determining the firm's overall attitude toward growth and the way it will manage its businesses or product lines B) A strategy at the business unit or product line level that focuses on improving a firm's competitive position C) A strategy by which managers in specific areas decide how best to achieve corporate goals through productivity D) A strategy that assists first line managers in making day-to-day decisions about motivating employees E) A strategy that integrates an organization's marketing goals into a cohesive whole by focusing on the ideal product mix to achieve maximum profit potential Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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80) A three-year goal is considered to be what?

A) Long-term B) Intermediate C) Short-term D) Objective E) Problematic Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

81) Which of the following BEST describes functional strategy?

A) A strategy for determining the firm's overall attitude toward growth and the way it will manage its businesses or product lines B) A strategy at the business-unit or product-line level that focuses on improving a firm's competitive position C) A strategy by which managers in specific areas decide how best to achieve corporate goals through productivity D) A strategy that assists first line managers in making day-to-day decisions about motivating employees E) A strategy that integrates an organization's marketing goals into a cohesive whole by focusing on the ideal product mix to achieve maximum profit potential Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

82) Increasing sales by 4 percent in the next eight months is an example of what kind of goal?

A) Tactical B) Strategic C) Short-term D) Intermediate E) Long-term Answer: C Difficulty: Easy AACSB: Reflective thinking Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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83) The marketing manager wants to increase regional sales by 2 percent each quarter over the next year. This is an example of what kind of goal?

A) Long-term B) Intermediate C) Short-term D) Strategic E) Tactical Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

84) Which of the following is the BEST example of unrelated diversification?

A) Ford Motor Company merging with General Motors B) Northwest Airlines merging with Procter & Gamble C) McDonald's merging with Burger King D) Tootsie Roll merging with Hershey E) Bath and Body Works merging with The Body Store Answer: B Difficulty: Difficult AACSB: Reflective thinking Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

85) Which variable of a SWOT analysis identifies changing consumer tastes, hostile takeover offers, and new government regulations?

A) Threats B) Opportunities C) Strategies D) Internal factors E) Weaknesses Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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86) When conducting a SWOT analysis of an organization, which question can help management brainstorm for the strengths section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered?

C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: D Difficulty: Moderate AACSB: Reflective thinking Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success. 87) When conducting a SWOT analysis of an organization, which question can help management brainstorm for the weaknesses section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success. 88) When conducting a SWOT analysis of an organization, which question can help management brainstorm for the opportunities section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: A Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

27 .

89) When conducting a SWOT analysis of an organization, which question can help management brainstorm for the threats section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered?

C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: E Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success. 90) Which of the following would be classified as opportunities for an organization? A) Government regulation of the organization's services B) Highly unionized workers in the organization's industry C) New competitors D) Stronger demand for the organization's services E) Economy fluctuations Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success. 91) What type of analysis focuses on external factors that affect the organization? A) Organizational analysis B) Tactical analysis C) Environmental analysis D) Functional analysis E) Financial analysis Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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92) In which step of the strategy formulation process would a SWOT analysis take place?

A) Matching the organization and its environment B) Analyzing the organization and the environment C) Developing tactical and operations plans D) Setting strategic goals E) Contingency planning and crisis management Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

93) Which of the following is the last step in the strategy formulation process and requires comparing threats and opportunities against strengths and weaknesses?

A) Organizational analysis B) Matching the organization and its environment C) Analyzing the organization and the environment D) Setting strategic goals and mission statements E) Conducting an analysis using SWOT techniques Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

94) Which of the following is the process of helping an organization maintain an effective alignment with its environment?

A) Strategic management B) SWOT analysis C) Goal setting D) Corporate strategy E) Competitive strategy Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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95) Which of the following should be used when making decision on a daily basis so that the business can achieve its organizational goals?

A) Goals B) Strategy C) Global management D) Corporate strategy E) Functional strategy Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

96) Which of the following is a key purpose of goal setting?

A) To determine when a SWOT analysis might be needed B) To maintain effective alignment with the environment C) To outline how a firm will achieve their purpose in the environment D) To determine the businesses overall attitude toward growth E) To help managers assess performance Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

97) The businesses a company will own and operate that are dissimilar to their core business, and the strategy for determining the firm's overall attitude toward growth is guided by A) the firm's goals.

B) the firm's mission.

C) the firm's corporate strategy.

D) the firm's attitude toward unrelated diversification.

E) the firm's functional strategy.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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98) Which of the following is the creation of a broad program for defining and meeting an organization's goals?

A) Setting strategic goals B) Environmental analysis C) Strategy formulation D) Tactical plans E) Operational plans Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

99) Which of the following should be derived directly from a firm's mission statement?

A) Strategic goals B) SWOT analysis C) Environmental analysis D) Functional strategy E) Competitive strategy Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

100) Which of the following is the purpose of an organizational analysis?

A) To identify environmental opportunities B) To analyze a firm's strengths and weaknesses C) To formulate strategy D) To match environmental threats and opportunities against corporate strengths and weaknesses E) To implement tactical plans Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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101) Which of the following reflect decisions about how a firm will allocate resources and the priorities of the company? A) Operational plans B) Organizational analysis C) Goals D) Mission statement E) Strategic plans Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success. 102) James has a meeting with his manager to develop short term plans to help guide decisions that are made within the department. James wants to be sure these plans support the company's strategic plans. Which of the following are James and his manager creating? A) Tactical plans B) Goals C) SWOT analysis D) Contingency plans E) Operational plans Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success. 103) After meeting with his manager, James has created a series of plans for each day, week, and month for his front-line managers. Which of the following is James sharing with his managers? A) Operational plans B) Tactical plans C) Contingency plans D) Strategic plans E) Crisis management plans Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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104) Business strategy focuses on improving the company's competitive position.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

105) The starting point in effective management is setting goals.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

106) Goal setting helps managers assess performance.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

107) Long-term goals are derived directly from a firm's mission statement.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

108) A firm first sets its strategies and then focuses attention on goals to accomplish them.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

109) Strategy has a wider scope than planning.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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110) An organization retrenches by increasing its investment in a particular area.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

111) SWOT analysis is usually conducted before strategic goals have been established.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

112) A strategy is an objective that a business hopes and plans to achieve.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

113) What is a mission statement?

Answer: A mission statement is a statement of how the organization will achieve its purposes in the environment in which it conducts business. It is an important way that a firm encapsulates and communicates its core business to employees, clients, and a range of other stakeholders.

Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

114) What is the difference between a goal and a strategy?

Answer: A goal is an objective that a business hopes and plans to achieve. A strategy is a broad set of organizational plans for implementing the decisions made for achieving organizational goals. A strategy entails the goals that a company sets out to achieve. Therefore, the strategy constitutes the way that the goals can be realized.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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115) Describe the components of a SWOT analysis?

Answer: After strategic goals have been set, organizations usually go through SWOT analysis as they continue to formulate their strategy. This process involves assessing organizational (internal) strengths (S) and weaknesses (W) and environmental (external) opportunities (O) and threats (T). A SWOT analysis is a widely used process for evaluating the current strengths and weaknesses of a company's business.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

116) Discuss the four main purposes of organizational goal setting.

Answer: Goal setting provides direction and guidance for managers at all levels, helps firms allocate resources, helps to define corporate culture, and helps managers assess performance.

However, the process of setting goals needs to be conducted in a disciplined fashion in order to support these purposes.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

117) Discuss the three broad levels of strategy that organizations may implement.

Answer: Organizations may set corporate, business, and functional strategies. The purpose of corporate strategy is to determine the firm's overall attitude toward growth and the way it will manage its businesses or product lines. Business strategy, which takes place at the level of the business or product line, focuses on improving the company's competitive position. At the level of functional strategy, managers in specific areas decide how best to achieve corporate goals through productivity. These three levels form a hierarchy in terms of strategic management and planning.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

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118) Differentiate among strategic, tactical, and operational plans.

Answer: Strategic plans reflect decisions about resource allocations, company priorities, and the steps needed to meet strategic goals. Tactical plans are shorter-range plans for implementing specific aspects of the company's strategic plans. Operational plans set short-term targets for daily, weekly, or monthly performance. Strategy needs to be translated into actual plans, which means that strategic, tactical, and operational plans are connected.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

119) Describe the three kinds of goals a firm should use to help achieve its mission.

Answer: In addition to its mission, every firm also has long-term, intermediate, and short-term goals. Long-term goals relate to extended periods, typically 5 years or more. Intermediate goals are set for a period of 1 to 5 years. Companies usually set intermediate goals in several areas.

Short-term goals are set for perhaps 1 year and are developed for several different areas. After a firm sets its goals, it then focuses attention on strategies to accomplish them.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.4: Explain the importance of strategic management and effective goal setting in organizational success.

120) Which element of management is being utilized when using computer forecasts to determine possible outcomes of an intended change?

A) Strategy formulation B) Goal setting C) Crisis management D) Contingency planning E) Related diversification Answer: D Difficulty: Difficult AACSB: Reflective thinking Question Category: Application LO: 5.5: Discuss contingency planning and crisis management in today's business world.

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121) How can organizations best deal with emergencies requiring immediate response?

A) Strategic management B) Operational plans C) Crisis management plans D) Tactical plans E) Goal setting Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 5.5: Discuss contingency planning and crisis management in today's business world.

122) Contingency planning seeks to identify how a company will respond to change.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.5: Discuss contingency planning and crisis management in today's business world.

123) Effective contingency planning eliminated the need for crisis management plans.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.5: Discuss contingency planning and crisis management in today's business world.

124) Describe the purpose of contingency planning.

Answer: Contingency planning seeks to identify in advance important aspects of a business or its market that might change. It also identifies the ways in which a company will respond to changes.

Difficulty: Moderate AACSB: Reflective thinking Question Category: Application LO: 5.5: Discuss contingency planning and crisis management in today's business world.

125) Describe crisis management and one area of focus for much of that planning.

Answer: A crisis is an unexpected emergency requiring immediate response. Crisis management involves an organization's methods for dealing with emergencies. The focus of much of that planning related to the growing threat of terrorism. Specifically, businesses challenged themselves to consider how they might best respond if one of their facilities is bombed by terrorists or if an employee is taken hostage by a terrorist group.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Application LO: 5.5: Discuss contingency planning and crisis management in today's business world.

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126) Which element of an organization is defined by shared experiences, stories, beliefs, and norms?

A) Its human resources B) Its product philosophy C) Its corporate culture D) Its mission statement E) Its organizational structure Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 5.6: Describe the development and explain the importance of corporate culture.

127) When a company attempts to change its culture, what must take place to give the new culture solid shape within the firm?

A) The firm must set up new systems for appraising and compensating employees who enforce the new values.

B) A highly responsive strategy must be determined.

C) There must be a period devoted to conflict and resistance.

D) There must be renewed focus on the activities of the competitors and customers.

E) There must be a thorough SWOT analysis to determine if the change is necessary.

Answer: A Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 5.6: Describe the development and explain the importance of corporate culture.

128) How does a new employee learn acceptable behaviors within the organization?

A) Quality standards B) Crisis management strategies C) Contingency plans D) Operational plans E) Cultural norms Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

38 .

129) Which of the following is one of the purposes of a strong corporate culture?

A) It shapes management philosophy, style, and behavior.

B) It supports top-down communications.

C) It aids in assimilating new organizations into the firm.

D) It reinforces the financial success of the firm.

E) It directs the efforts of employees in working toward the same goals.

Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

130) Which of the following is critical for a firm to use culture to its advantage?

A) Tactical plans B) Goal setting C) A strong mission statement D) Comprehensive strategies E) Effective communication Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

131) Corporate culture is largely a result of state and local laws and regulations.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

132) A strong corporate culture directs employees' efforts and helps everyone work toward the same goals.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

133) It is not possible to change an organization's corporate culture.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 5.6: Describe the development and explain the importance of corporate culture.

39 .

134) Corporate culture influences management's philosophy, style, and behavior.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

135) To use a firm's culture to its advantage, effective communication is critical.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

136) Define the term corporate culture.

Answer: Corporate culture is the shared stories, beliefs, experiences, and norms that characterize an organization. Corporate culture helps define the work and business climate within an organization.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 5.6: Describe the development and explain the importance of corporate culture.

137) What are the purposes of having a strong corporate culture?

Answer: A strong corporate culture serves several purposes. First, it directs employees' efforts and helps everyone work toward the same goals. Second, it helps newcomers identify accepted behaviors. Finally, it gives each organization its own identity, much as personalities give identity to people. Corporate culture constitutes a unique identity giving every company a unique feel or signature. A well-known example is the "work hard, play hard" culture that is part of the Google work environment.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

40 .

138) Discuss the importance of effective communication is building a strong organizational culture.

Answer: To use a firm's culture to its advantage, managers must accomplish several tasks, all of which hinge on effective communication. First, managers themselves must have a clear understanding of the culture. Second, they must transmit the culture to others in the organization.

Thus, training and orientation for newcomers in an organization often include information about the firm's culture. A clear and meaningful statement of the organization's mission is also a valuable communication tool. Finally, managers can maintain the culture by rewarding and promoting those who understand it and work toward maintaining it.

Difficulty: Difficult AACSB: Reflective thinking Question Category: Critical Thinking LO: 5.6: Describe the development and explain the importance of corporate culture.

41 .

Business Essentials, 13e (Ebert/Griffin) Chapter 6 Organizing the Business 1) Which term refers to the specification of jobs to be done within an organization and the ways in which those jobs relate to one another?

A) Delegation B) A mission statement C) Cross training D) Role responsibility E) Organizational structure Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

2) Which of the following clarifies structure and shows employees where they fit into a firm's operations?

A) Delegation B) Departmentalization C) Organization charts D) Mission statement E) Job descriptions Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

3) What do the solid lines on an organization chart show in reporting relationships within a company?

A) Mission statement B) Chain of command C) Job specialization D) Grapevine activity E) Market share Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

1 .

4) Which factor plays a key role in determining an organization's structure?

A) Competition and technology B) Location and life-cycle stage C) Profitability and leverage D) Research and development E) Mission and strategy Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 6.1: Discuss the factors that influence a firm's organizational structure.

5) What is the advantage of an organization that is unstructured and informal?

A) Decisions can be made by consensus.

B) There is less effect on the organization in a rapidly changing market.

C) Managers do not become overwhelmed with decision making.

D) It can become a more complex structure quickly and efficiently.

E) The structure is more adaptable to the environment.

Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 6.1: Discuss the factors that influence a firm's organizational structure.

6) Reporting relationships within a company are indicated on an organization chart and represent A) organizational structure.

B) mission and strategy responsibility.

C) areas of specialization.

D) chain of command.

E) decision-making responsibility.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

2 .

7) Elizabeth works for a large international pharmaceutical company, which employees thousands of people around the word. She wants to review the organizational chart to see how her job relates to others in her work unit. To do so, she most likely will need to look at an organization chart that shows A) the entire organization.

B) her country.

C) all managers.

D) her department.

E) her division.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

8) Which of the following describes the specification of the jobs to be done within the organization, and the relationship between those jobs?

A) Organizational structure B) Chain of command C) Compartmentalization D) Hierarchy E) Job specialization Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

9) Which of the following is a key part of the management process and should be conducted with an equal awareness for both the internal and external environment of a firm?

A) Planning B) Chain of command C) Organizing D) Organizational structuring E) Product departmentalization Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

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10) Which of the following is likely to occur when an organization has a shift in its strategy?

A) Specialization B) Span of control issues C) Delegation D) Structural change E) Departmentalization Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

11) Organizations rarely change the organizational structure once it has been established.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

12) In an organization chart, each solid box represents a key division within the organization.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

13) Organization charts are graphical representations of employee salary information.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

14) The chain of command is depicted by solid lines on an organization chart.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

15) Organizational structure is a function of the organization's mission and strategy.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

4 .

16) The reporting relationships within an organization follow a chain from the highest level to the lowest level in the organization, and is known as chain of command.

Answer: TRUE Difficulty: Easy AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

17) Describe how organizations create and communicate their organizational structure.

Answer: Each organization must develop an appropriate organizational structure, which includes the specification of the jobs to be done and the ways in which those jobs relate to one another. Most organizations change structures almost continuously. Firms prepare organization charts to clarify structure and to show employees where they fit into a firm's operations. Each box represents a job, and solid lines define the chain of command, or reporting relationships. The charts of large firms are complex and include individuals at many levels. Because size prevents them from charting every manager, they may create single organization charts for overall corporate structure and separate charts for divisions.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.1: Discuss the factors that influence a firm's organizational structure.

18) Discuss the factors that must be considered when determining organizational structure.

Answer: Many factors play a part in determining an organization's optimal structure. Chief among them are the organization's mission and strategy. A dynamic and rapidly growing business, for example, needs an organizational structure that allows it to be flexible, to respond quickly to changes in its environment and strategy, and to grow. A stable organization with only modest growth goals and a more conservative strategy will most likely function best with a different organizational structure, perhaps one less flexible and more focused on current business activities. Size of the company and elements of the organization's environment also affect organizational structure. Organizing is a key part of the management process. As such, it must be conducted with an equal awareness of both a firm's external and internal environments.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.1: Discuss the factors that influence a firm's organizational structure.

5 .

19) What do managers do when the "job" of a firm is broken down into smaller jobs, allowing others to perform them?

A) Fragment the task B) Specialize the job C) Respond to the job D) Assign the task E) Control the job Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

20) Which of the following is an advantage of job specialization?

A) Workers can develop expertise in their jobs.

B) Workers will not need to be trained.

C) Jobs become more interesting.

D) Workers derive more satisfaction from their jobs.

E) Jobs do not need to be redefined.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

21) When a large organization has departments based on areas of production, what type of departmentalization is being utilized?

A) Customer departmentalization B) Process departmentalization C) Geographic departmentalization D) Functional departmentalization E) Product departmentalization Answer: E Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

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22) What is the advantage of using product departmentalization?

A) Managers can focus on specific product lines.

B) Products are organized based on the production process.

C) Products are better targets to specific customer groups.

D) Customer groups are easily identifiable.

E) Products are closer to where consumers are served.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

23) If a manufacturer divides the organization according to the way goods are created, what type of departmentalization is being utilized?

A) Functional departmentalization B) Process departmentalization C) Customer departmentalization D) Geographic departmentalization E) Brand departmentalization Answer: B Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

24) Which of the following is a natural part of organizational growth?

A) Retrenchment B) Entrepreneurship C) Job specialization D) Outsourcing E) Team consolidation Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

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25) Determining how people performing certain tasks can best be grouped together is called what?

A) Departmentalization B) Specialization C) Controlling D) Leadership E) Directing Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

26) What is dividing a store into a men's department, a women's department, and a luggage department an example of?

A) Product departmentalization B) Customer departmentalization C) Process departmentalization D) Geographic departmentalization E) International departmentalization Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

27) A snack food firm is divided by the areas they serve, including one division for the United States, one for Europe, and another for Asia. How is this firm departmentalized?

A) By customer B) By process C) By geography D) By function E) By productivity Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

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28) What is the process of designing specific jobs that need to be done and identifying the people who will perform them called?

A) Departmentalization B) Job specialization C) Group tasks D) Segmentation E) Team cohesion Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

29) Which term identifies the grouping of jobs into logical units?

A) Specialization B) Accountability C) Authorization D) Departmentalization E) Process management Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

30) What kind of departmentalization happens when an organization is divided into operations categorized by tasks performed by employees?

A) Functional departmentalization B) Process departmentalization C) Customer departmentalization D) Geographic departmentalization E) Regional departmentalization Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

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31) What type of departmentalization would be most effective for a small or new organization?

A) Geographic B) Functional C) Customer D) Product E) Process Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

32) If specific jobs are grouped into logical units based on location, what type of departmentalization is being utilized?

A) Functional B) Product C) Process D) Customer E) Geographic Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

33) A separate company unit responsible for its own cost and revenue is referred to as which of the following?

A) Centralized organization B) Decentralized organization C) Department D) Job specialty E) Profit center Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

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34) Job specialization is the process of eliminating unnecessary or undesirable jobs.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

35) Departmentalization refers to the process of grouping jobs into logical units.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

36) Geographic departmentalization divides firms according to the areas of the country or the world that they serve.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

37) The building blocks of all organizations are specialization and centralization.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

38) As organizations grow and become larger, jobs tend to become less specialized.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

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39) Firms with production, marketing, human resource, and finance departments have a process form of organization.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

40) Firms typically use the same form of departmentalization at upper and lower levels.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

41) Profit centers can occur based on function, product, process, customer, or geographical areas.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

42) Deciding who will be empowered to make which decisions is determined when developing the structure of a business.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

43) Functional departmentalization is the process of dividing an organization according to the skill sets of workers.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

12 .

44) Briefly describe the five basic forms of departmentalization.

Answer: The five basic forms of departmentalization are customer, product, process, geographic, and functional. Customer departmentalization occurs when the organization is divided according to the types of customers they serve. An organization with product departmentalization groups people and functions according to the specific products being created. Process departmentalization occurs when the organization is divided according to production processes. Organizations with geographic departmentalization create divisions to serve different geographic areas. Finally, functional departmentalization occurs when departments are created around their function or activity. The five basic forms of departmentalization are customer, product, process, geographic, and functional.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

45) Explain geographic departmentalization and discuss how and why an organization might use this structure.

Answer: Geographic departmentalization divides firms according to the areas of the country or the world they serve. Levi Strauss, for instance, has one division for North and South America; one for Europe, the Middle East, and North Africa; and one for the Asia Pacific region. Utility companies might use geographic departmentalization based on the location of the customer or the location of the firm's resources.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

46) Briefly describe the first steps in developing the structure of any new business.

Answer: The first steps in developing the structure of any business, large or small, involve three activities: 1.) Specialization which is used in determining who will do what, 2.) departmentalization, which is determining how people performing certain tasks can best be grouped together, and 3.) the establishment of a decision-making hierarchy. This process involved deciding who will be empowered to make which decisions and who will have authority over others.

These three activities are the building blocks of all business organizations.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Application LO: 6.2: Explain specialization and departmentalization as two of the building blocks of organizational structure.

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47) Which process is used to assign work to subordinates? A) Authority B) Decentralization C) Delegation D) Staffing E) Decentralization Answer: C Difficulty: Easy AACSB: Analytical thinking Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 48) Which organizational structure is characteristic of decentralized firms? A) Flat B) Tall C) Diverse D) Multi-layered E) Matrix Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

49) Which organizational structure is characteristic of centralized firms? A) Flat B) Tall C) Very large D) Responsive to change E) Well capitalized Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

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50) Which of the following is an employee's duty to perform an assigned task?

A) Delegation B) Authority C) Responsibility D) Accountability E) Specialization Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

51) Which of the following provides employees with the power to make the decisions necessary to complete a task called?

A) Delegation B) Specification C) Authority D) Responsibility E) Accountability Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

52) What is authority that flows up and down the chain of command called?

A) Staff authority B) Departmental authority C) Delegated authority D) Divisional authority E) Line authority Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

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53) Which type of departments are linked to the production and sales of specific products?

A) Staff departments B) Matrix departments C) Line departments D) Organizational departments E) Entrepreneurial departments Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 54) What is authority given to a decision-making body with power beyond that possessed by any one person? A) Risk aversion B) Committee and team C) Line D) Matrix E) Product and labor Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 55) In which type of organization are decisions approved by upper management before they are implemented? A) Line B) Staff C) Decentralized D) Centralized E) Learning Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

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56) In which type of organization is decision-making authority delegated to levels of management at various points below the top?

A) Centralized B) Decentralized C) Flat D) Geographic E) Autocratic Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

57) What kind of organization becomes more responsive to its environment by breaking the company into more manageable units?

A) Centralized B) Decentralized C) Geographic D) Process-oriented E) Customer departmentalized Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

58) What type of structure represents one with relatively few layers of managers?

A) Tall organizational structure B) Short organizational structure C) Flat organizational structure D) Elliptical organizational structure E) Triangular organizational structure Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

17 .

59) Companies with centralized authority systems typically require multiple layers of management. What type of organizational structures are these companies utilizing?

A) Tall B) Short C) Flat D) Broad E) Compressed Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

60) In tall organizations, which feature describes the span of control?

A) Short B) Tall C) Wide D) Narrow E) Horizontal Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

61) Which is the preferred span of control when jobs are more diversified or prone to change?

A) Wide B) Narrow C) Tall D) Deep E) Authoritative Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

18 .

62) Which of the following begins when a manager assigns responsibility to a subordinate?

A) Centralization B) Delegation C) Liability D) Authority E) Training Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

63) After responsibility for a task is assigned, which of the following comes next to ensure the employee has the power to make the decisions necessary to complete the task?

A) The centralization of the task is identified.

B) The liability of the task is determined.

C) The span of control is decided.

D) The work team is created.

E) Authority is granted.

Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

64) Which type of management is exemplified by the idea that managers should delegate to subordinates and allow those subordinates to be responsible for decisions?

A) Departmentalized B) Linear C) Centralized D) Divisional E) Decentralized Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

19 .

65) Which of the following BEST describes authority?

A) The power to make the decisions necessary to complete a task B) The ability of subordinates to accomplish tasks assigned by managers C) The number of people supervised by one manager D) The ability to take on new responsibility E) The duty to perform an assigned task Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

66) Which of the following BEST describes accountability?

A) The power to make the decisions necessary to complete a task B) The obligation employees have to their manager for the successful completion of an assigned task C) The decision to communicate clear expectations related to assigned tasks D) The number of people supervised by one manager E) The duty to perform a task Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

67) What authority is based on special expertise and usually involves counseling and advising?

A) Line authority B) Matrix authority C) Delegated authority D) Staff authority E) Divisional authority Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

20 .

68) What are an organization's specialists in law, accounting, and human resource management commonly called? A) Profit centers B) Cost centers C) Staff members D) Line members E) Unit managers Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 69) Which term describes groups of operating employees who are empowered to plan and organize their tasks and to perform those tasks with a minimum of supervision? A) Task forces B) Standing committees C) Work teams D) Division committees E) Board members Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 70) In a centralized structure, most decision-making authority is delegated to levels of management at various points below the top. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 71) Accountability refers to the obligation of subordinates for accomplishing tasks assigned by managers.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

21 .

72) Flat organizational structures are usually associated with centralized decision making.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

73) Employees' abilities and the supervisor's managerial skills help determine whether span of control is wide or narrow.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

74) When several employees perform the same simple task, a narrow span of control is most appropriate.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

75) Line departments are linked directly to the production and sales of a specific product.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

76) The question of decentralization versus centralization affects the overall organization.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

22 .

77) During times of uncertainty, most organizations move to the decentralization of their decision-making process.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

78) Tall organizational structures are more efficient at information flow and decision making.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

79) Describe the difference between delegation and the centralization of the organization when establishing the organizational structure.

Answer: The third major building block of organizational structure is the establishment of a decision-making hierarchy. This is usually done by formalizing reporting relationships. When the focus is on the reporting relationships among individual managers and the people who report to them, it is most commonly referred to as delegation. However, when the focus is on the overall organization, it becomes a question of decentralization versus centralization.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

80) Identify and discuss three factors that may affect a manager's span of control.

Answer: Factors that may affect a manager's span of control include employees' abilities, the similarity and simplicity of tasks, and the extent to which tasks are interrelated. Other factors may include the supervisor's management skills and the synergy between the assigned tasks.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

23 .

81) Discuss ways in which the manager's decision-making authority is related to span of control.

Answer: The distribution of authority in an organization affects the number of people who work for any individual manager. In a flat organizational structure, the number of people directly managed by one supervisor, the manager's span of control, is usually wide. In tall organizations, span of control tends to be narrower. Employees' abilities and the supervisor's managerial skills influence how wide or narrow the span of control should be, as do the similarity and simplicity of tasks and the extent to which they are interrelated. If lower-level managers are given more decision-making authority, their supervisors will have fewer responsibilities and may then be able to take on a widened span of control. Similarly, when several employees perform either the same simple task or a group of interrelated tasks, a wide span of control is possible and often desirable. For instance, because of the routine and interdependent nature of jobs on an assembly line, one supervisor may well control the entire line.

In contrast, when jobs are more diversified or prone to change, a narrow span of control is preferable.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

82) Briefly summarize the steps in the delegation process.

Answer: The delegation process begins when responsibility is assigned. Then, authority is granted. Finally, accountability is created. The delegation sequence includes assigning responsibility, granting authority, and instigating accountability processes.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

83) What is the difference between responsibility and authority?

Answer: Responsibility is the duty to perform an assigned task, whereas authority is the power to make the decisions necessary to complete the task. Responsibility relates to task assignment; authority relates to task completion.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy.

24 .

84) What is delegation? Identify four reasons that managers have trouble delegating.

Answer: Delegation is the process by which managers allocate work to employees. Experts pinpoint several reasons why managers may have trouble delegating effectively. Some managers may be concerned that employees are less able to perform a job. Managers may also be concerned that the employee will show them up in front of others by doing a superior job. Managers may be hesitant to delegate because of a desire to keep as much control as possible over operations. Finally, managers may lack the ability to effectively delegate. The four reasons that managers have trouble with delegation include perception of employee ability to complete a task, concern about appearing inadequate, desire to exert control, and lack of effective delegation skills. Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 85) List and describe the three forms of authority. Answer: The three forms of authority are line authority, staff authority, and committee and team authority. Line authority flows in a direct chain of command from the top of the company to the bottom. Staff authority is based on expertise and usually involves counseling and advising managers. Committee and team authority is granted to committees or work teams involved in a firm's daily operations. Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 6.3: Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. 86) Which form of organization is used by most small to medium-sized firms? A) Divisional B) Functional C) Matrix D) International E) Stratified Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

25 .

87) Firms with which structure are organized around departments for each basic business activity?

A) Divisional B) Matrix C) Functional D) International E) Regional Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

88) Which of the following structures relies on product departmentalization?

A) Matrix B) Functional C) Divisional D) International E) Regional Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

89) In which organizational structure are groups established that resemble separate businesses in that they produce and market their own products?

A) Regions B) Divisions C) Function centers D) Cost centers E) Work hubs Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

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90) Which style of organization relies almost entirely on employees working on a common project with little or no underlying functional hierarchy? A) Team B) Virtual C) Learning D) Flexible E) Stratified Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 91) Which organizational structure is used when an organization has little or no formal structure and with only a handful of permanent employees, and when needed, is supplemented by temporary employees? A) Team B) Virtual C) Learning D) Flexible E) Balanced Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 92) What type of organizational structure seeks to integrate continuous improvements with lifelong learning and personal employee development? A) Team B) Virtual C) Learning D) Flexible E) Evolving Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

27 .

93) In a large firm, what can a functional structure foster, even though it can be counterproductive to the goals of the organization?

A) Competitiveness B) Centralization C) Decentralization D) Diversity E) Creativity Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

94) Which of the following types of structure entails a second chain of command, and is often used when developing new products?

A) Divisional B) Departmental C) Committee D) Matrix E) Team Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

95) International organizational structures are an approach to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

96) Divisional structure is the relationships between group functions and activities that determine authority.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

28 .

97) The functional organizational structure is the approach to organizational structure used by most small to medium-sized firms.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

98) An international organization is one in which traditional boundaries and structures are minimized or eliminated altogether.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

99) A virtual organization has little or no formal structure.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

100) A divisional structure relies on functional departmentalization.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

101) Matrix structures are considered to be highly flexible and readily adaptable.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

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102) Virtual organizations exists only in response to its own needs and requirements.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 103) Learning organizations are often centered around small groups that strive for continuous product improvement. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 104) Discuss the purpose and goals of learning organizations. Answer: The so-called learning organization works to integrate continuous improvement with continuous employee learning and development. Specifically, a learning organization works to facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs. Although managers might approach the concept of a learning organization from a variety of perspectives, the most frequent goals are superior quality, continuous improvement, and ongoing performance measurement. The idea is that the most consistent and logical strategy for achieving continuous improvement is to constantly upgrade employee talent, skill, and knowledge. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

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105) In which way can a matrix structure support the functional structure of an organization? Answer: Sometimes a matrix structure, a combination of two separate structures, works better than either simpler structure alone. This structure gets its matrixlike appearance by using one underlying "permanent" organizational structure and then superimposing a different organizing framework on top of it. Suppose a company using a functional structure wants to develop a new product as a one-time special project. A team might be created and given responsibility for that product. The project team may draw members from existing functional departments, such as finance and marketing, so that all viewpoints are represented as the new product is being developed; the marketing member may provide ongoing information about product packaging and pricing issues, for instance, and the finance member may have useful information about when funds will be available. In some companies, the matrix organization is a temporary measure installed to complete a specific project and affecting only one part of the firm. In these firms, the end of the project usually means the end of the matrix–either a breakup of the team or a restructuring to fit it into the company's existing line-and-staff structure. Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 106) What does a divisional structure rely on and why does it rely on this feature?

Answer: A divisional structure relies on product departmentalization. Organizations using this approach are typically structured around several product-based divisions that operate like separate businesses. Divisional structures can resemble separate businesses where each is responsible for the production and marketing of their own products.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 107) Because international organizational structures have emerged in response to the need to manufacture, purchase, and sell in global markets; how do some companies adopt a truly global structure? Answer: Some companies adopt a truly global structure in which they acquire resources (including capital), produce goods and services, engage in research and development, and sell products in whatever local market is appropriate, without consideration of national boundaries. The advantage of an international organizational structure is that it allows the company to function as one integrated global organization. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

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108) Describe the four basic forms of organizational structure.

Answer: The basic forms of organizational structure are functional, divisional, matrix, and international. In a functional organization, authority is determined by the relationships between groups and activities. Functional organizations tend to be structured around basic functions. In a divisional organization, corporate divisions operate as autonomous businesses under the larger corporate umbrella. Organizations with matrix structures form teams, and team members report to two or more managers. International organizational structures have developed in response to the need to manufacture, purchase, and sell in global markets.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

109) List and describe three advantages of a divisional structure.

Answer: In a divisional organization, corporate divisions operate as autonomous businesses under the larger corporate umbrella. A divisional structure allows the corporation to evaluate the performance of each division independently. Because the divisions are relatively autonomous, a firm can sell or eliminate a single division with minimal disruption to the remaining business operations. Finally, a divisional structure can create healthy competition. Divisions can share certain corporate-level resources. Divisions operate as autonomous businesses. The advantages include independent evaluation, ability to sell or disband with minimal disruption to the corporation, and the opportunity to compete and share resources.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.4: Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.

110) What are everyday social interactions among employees that transcend formal jobs and job interrelationships called?

A) Traditional structure B) Informal organization C) Matrix opportunities D) Production organization E) Learning organizations Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.5: Describe the informal organization and discuss intrapreneuring.

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111) Which term describes creating and maintaining the innovation and flexibility of a small business environment within the confines of a large, bureaucratic structure?

A) Learning organization B) Process organization C) Intrapreneuring D) Virtual learning E) Product innovation Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 6.5: Describe the informal organization and discuss intrapreneuring.

112) Which of the following organizational systems is the part that can be seen and represented in chart form?

A) Networking B) Formal organization C) Informal organization D) Grapevine E) Intrapreneuring Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.5: Describe the informal organization and discuss intrapreneuring.

113) Which of the following is an informal communications network within the organization?

A) Work groups B) Virtual learning C) The grapevine D) The corporate structure E) Teams Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.5: Describe the informal organization and discuss intrapreneuring.

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114) How can an organization minimize the potential damage caused by inaccurate information spread through the grapevine?

A) Ban employees from using the internet and e-mail for personal reasons.

B) Identify a list of off-limit topics.

C) Respond vigorously to inaccurate information.

D) Allow new information to be released only through formal communication channels.

E) Keep groups small and focused.

Answer: C Difficulty: Moderate AACSB: Reflective thinking Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

115) What is the name given to the middle manager who learns about a new project and becomes committed to the support of the idea?

A) Stakeholder B) Sponsor C) Intrapreneur D) Innovator E) Product champion Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 6.5: Describe the informal organization and discuss intrapreneuring.

116) To move a new idea to a marketable entity, who must approve and support the project, including the funding of the idea?

A) Inventors B) Sponsors C) Stakeholders D) Product champions E) Project committees Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 6.5: Describe the informal organization and discuss intrapreneuring.

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117) When a firm wants to gather information on the potential reaction to a new policy or idea, how can a manager collect information?

A) Through intrapreneuring B) Through social media monitoring C) By utilizing the company grapevine D) By utilizing the informal chain of command E) By organizing new reporting relationships Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

118) Which of the following is used to carry personal information within the organization?

A) Cluster chain B) Interest groups C) Gossip chain D) Product champions E) Sponsors Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

119) Which of the following is the person who conceives and develops the new idea, product or service within the organizations?

A) Product champion B) Catalyst C) Inventor D) Informal group manager E) Sponsor Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

120) Frequently, the informal organization effectively alters a company's formal structure.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

35 .

121) The informal organization is not as powerful as the formal structure.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

122) Intrapreneuring attempts to create and maintain the innovation and flexibility found in large, bureaucratic structures.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

123) The gossip chain is used to carry information to a few select individuals, who then pass it on or keep it to themselves.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

124) Informal groups have very little influence on the interests of the organization.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

125) The grapevine can provide highly accurate information, and social media plays a growing role in the grapevine.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

36 .

126) The grapevine, according to some studies, is said to be a fairly accurate source of information. Discuss the contributing factors that influence the accuracy of the grapevine.

Answer: There is some disagreement about how accurate the information carried by the grapevine is, but research is increasingly finding it to be fairly accurate, especially when the information is based on fact rather than speculation. One study found that the grapevine may be between 75 percent and 95 percent accurate. That same study also found that informal communication is increasing in many organizations for several basic reasons. One contributing factor is the continued growth in merger, acquisition, and takeover activity.

Because such activity can greatly affect the people within an organization, it follows that they may spend more time talking about it. A second contributing factor is that as more and more corporations move facilities regularly and have more but smaller administrative centers, employees tend to talk less and less to others outside the organization and more and more to one another. Yet another contributing factor is simply the widespread availability of information technology that makes it easier than ever before for people to communicate quickly and easily. Much like in informal groups, social media plays a growing role in the grapevine. Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring. 127) Why is it important that organizations pay attention to the information organizations structure within the formal organization? Answer: Frequently, the informal organization, everyday social interactions among employees that transcend formal jobs and job interrelationships, effectively alters a company's formal structure. They may talk about business, the boss, or non-work-related topics. Their impact on the organization may be positive (if they work together to support the organization), negative (if they work together in ways that run counter to the organization's interests) or irrelevant.

On the negative side, the informal organization can reinforce office politics that put the interests of individuals ahead of those of the firm and can disseminate distorted or inaccurate information. For example, if the informal organization is highlighting false information about impending layoffs, valuable employees may act quickly (and unnecessarily) to seek other employment. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring. 128) What is an informal organization and how does it relate to the formal structure? Answer: The informal organization consists of the everyday social interactions among employees that go beyond formal jobs and job interrelationships. It can affect the company's formal structure by changing the way information is sourced and distributed. In certain cases, the informal organization is sometimes just as powerful, if not more powerful, than the formal structure. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

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129) How can a firm utilize and control an informal company grapevine?

Answer: Attempts to eliminate the grapevine are fruitless, but fortunately the manager does have some control over it. By maintaining open channels of communication and responding vigorously to inaccurate information, the manager can minimize the damage the grapevine can do. The grapevine can actually be an asset. For example, by learning who the key people in the grapevine are, for example, the manager can partially control the information they receive and use the grapevine to sound out employee reactions to new ideas, such as a change in human resource policies or benefit packages. The manager can also get valuable information from the grapevine and use it to improve decision making.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

130) Discuss the types of grapevines within an organization and how accurate the grapevine can be.

Answer: The gossip chain occurs when one person spreads the message to many other people.

Each one, in turn, may either keep the information confidential or pass it on to others. The gossip chain is likely to carry personal information. The other common grapevine is the cluster chain, in which one person passes the information to a select few individuals. Some of the receivers pass the information to a few other individuals; the rest keep it to themselves. There is some disagreement about the accuracy of the information carried by the grapevine, but research is increasingly finding it to be fairly accurate, especially when the information is based on fact rather than speculation. One study found that the grapevine may be between 75 percent and 95 percent accurate.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

131) Discuss reasons why informal communication plays a growing role in an organization.

Answer: Informal communication is increasing in many organizations for several basic reasons.

One contributing factor is the recent increase in merger, acquisition, and takeover activity.

Because such activity can greatly affect the people within an organization, it follows that they may spend more time talking about it. The second contributing factor is that as more and more corporations move facilities from inner cities to suburbs, employees tend to talk less and less to others outside the organization and more and more to one another. Yet another contributing factor is simply the widespread availability of information technology that makes it easier than ever before for people to communicate quickly and easily. Much like in informal groups, social media plays a growing role in the grapevine.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 6.5: Describe the informal organization and discuss intrapreneuring.

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Business Essentials, 13e (Ebert/Griffin) Chapter 7 Operations Management and Quality 1) Which term refers to all the activities involved in making products for customers?

A) Operations B) Processes C) Planning D) Scheduling E) Performance Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.1: Explain the meaning of operations and discuss the growth in the services and goods sectors of the U.S. economy.

2) Which of the following are the activities that produce intangible and tangible products, such as entertainment, transportation, and education?

A) Scheduling B) Service operations C) Tangibility D) Goods operations E) Performance operations Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.1: Explain the meaning of operations and discuss the growth in the services and goods sectors of the U.S. economy.

3) Which of the following is critical to the success or failure of service operations?

A) Provider-customer contact B) Internet exposure C) Supply chain D) Tangible services products E) Supplier-manufacture contact Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.1: Explain the meaning of operations and discuss the growth in the services and goods sectors of the U.S. economy.

1 .

4) Services are more tangible, more customized, and more storable than most products.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.1: Explain the meaning of operations and discuss the growth in the services and goods sectors of the U.S. economy.

5) The United States is the world's second largest exporter of manufactured good, trailing only China.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.1: Explain the meaning of operations and discuss the growth in the services and goods sectors of the U.S. economy.

6) Discuss the important of the service industry in terms of employment and gross domestic product.

Answer: Both goods and service industries are important, but employment has risen significantly in the service sector and has leveled off at just 11 to 12 percent in goods-producing industries for years 2004 through 2019. Much of this growth comes from e-commerce, business services, health care, amusement and recreation, and education. By 2019, the service sector's growth generated about 68 percent of private-sector national income. The service sector's greater percentage of GDP has hovered above 65 percent in recent years. At the same time, the smaller 11 percent of the workforce in goods-producing jobs produced 32 percent of national income.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.1: Explain the meaning of operations and discuss the growth in the services and goods sectors of the U.S. economy.

7) When a company produces products when consumers want them, it creates which type of utility?

A) Ownership B) Time C) Form D) Place E) Value Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

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8) In a business, whose job is it to draw up plans to transform resources into products and bring together basic resources, such as knowledge, physical materials, equipment, and labor? A) CEO B) Operations manager C) Quality manager D) Floor foreman E) Supply manager Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 9) Which term describes services that cannot be produced ahead of time? A) Transformed B) Lowcontact C) Unstorable D) Intangible E) Consistent Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 10) Which of the following refers to a set of methods and technologies used to produce a good or service? A) Quality ownership B) Production C) Utility D) Value added analysis E) Operations process Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

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11) When a company makes products available for consumers where they are convenient for the consumers, which type of utility is created? A) Time B) Form C) Place D) Possession E) Leisure Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 12) Which of the following is the ability of a product to satisfy a human want or need? A) Utility B) Relative advantage C) Content D) Satisfaction E) Quality ownership Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 13) When a firm produces goods for mass consumption, what type of goods production method is generally used? A) High-contact systems B) Make-to-order C) Layout planning D) Low-contact systems E) Make-to-stock Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

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14) In which type of system is the customer be actively involved in order to receive the good or service?

A) Make-to-stock B) High-contact C) Intangible D) Low contact E) Operations process Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

15) What goods-producing operations method is designed around specific customer specifications?

A) High-contact systems B) Make-to-order C) Layout planning D) Low-contact systems E) Make-to-stock Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

16) Which of the following must be considered when classifying services?

A) The ability to stock pile services B) Extent of customer contact C) The transformation of the customer D) The ability to transform possessions E) Time utility Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

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17) In a low-contact system, the customer must be a part of the system to receive the service. Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 18) By turning raw materials into finished goods, production creates form utility. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 19) Firms that make only tangible products are engaged in goods production. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 20) The purpose of a service operation is to transform customers or their possessions. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production. 21) Differentiate between high- and low-contact processes. Give an example of each. Answer: Processes may be classified according to the extent of customer contact as either high- or low-contact processes. In a high-contact process, the customer must be a part of the system. Examples of high-contact processes include public transportation, medical services, and most legal services. With a low-contact process, customers need not be a part of the system to receive the service. Examples include check-processing operations at the bank and lawn-care services. The manager of a high-contact process must be more concerned with the customer experience. Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

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22) Explain what is meant by the term utility. What type of utility is created when a pharmacy changes its evening schedule to remain open for an extra hour in response to customer needs?

Answer: Utility is a product's ability to satisfy a human want or need. The pharmacy creates time utility by being open at a convenient time for customers.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

23) Explain time, place, and form utility and provide an example of each.

Answer: Time utility is created when a company makes products available when consumers want them. Examples may include seasonal items such as Christmas ornaments, bathing suits, and mosquito repellent. Place utility is created when a company makes a product's location convenient for consumers. An example is the placement of routinely purchased items in convenience stores or conveniently located discount stores. Form utility is created when a company combines materials to create products. A business adds customer value by providing utility.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

24) Differentiate between goods production and service operations.

Answer: Goods production involves tangible products, such as radios, newspapers, buses, and textbooks. Through service operations, firms produce tangible and intangible service products such as entertainment, transportation, and education. General Electric is a company that produces goods and provides services.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

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25) Describe the difference between the make-to-order and make-to-stock production processes.

Answer: We can classify goods production into broad groupings by asking whether its operations process has a make-to-order or a make-to-stock emphasis. We can classify services according to the extent of customer contact required. Clothing, such as evening gowns, is available either off-the-shelf in department stores or custom-made at a designer or tailor shop.

The designer or tailor's make-to-order operations respond to one-of-a-kind gown requirements including unique patterns, materials, sizes, and shapes, depending on customers' characteristics.

Make-to-stock operations, in contrast, produce standard gowns in large quantities to be stocked on store shelves or in displays for mass consumption. The production processes are quite different for the two settings, including procedures for designing gowns; planning for materials purchases; equipment and work methods for cutting, sewing, and assembling gowns; and employee skills for production.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

26) Describe the role of the customer in the operations process of a service.

Answer: Because service operations transform customers or their possessions, the customer is often present in the operations process. To get a haircut, for example, most of us have to go to a hair salon. As participants in the operations process, customers can affect it. As a customer, you expect the salon to be conveniently located (place utility), to be open for business at convenient times (time utility), to provide safe and comfortable facilities, and to offer high-quality grooming (form utility) at reasonable prices (value for money spent). Accordingly, the manager sets hours of operation, available services, and an appropriate number of employees to meet customer requirements. But when a customer, scheduled for only a haircut, also asks for additional services, such as color highlights or a shave, the service provider must quickly adjust the service activities to provide customer satisfaction. High customer contact has the potential to affect the process significantly.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.2: Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

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27) Which term describes a special ability that production does especially well allowing the company to outperform the competition?

A) Supply chain management B) Total quality management C) Process engineering D) Operations capability E) Value-added analysis Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

28) Which of the following helps to determine operations capabilities and allows the firm to focus all activities in a particular direction?

A) Flexibility of activity B) High-context system C) Business strategy D) Extent of customer contact E) Production capability Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

29) Which type of strategy is a firm using when promoting quick, consistent, and on time delivery for every order?

A) Quality B) Low cost C) Flexibility D) Dependability E) Accessibility Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

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30) Which type of strategy is being used to attract customers when a product performs reliably, has an appealing fit, and consistently meets or exceeds customer expectations?

A) Quality B) Low cost C) Flexibility D) Dependability E) Customer service Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

31) Which of the following supports a business strategy that incorporates the key operational capability of flexibility?

A) Maintaining excess production capability B) Reducing labor and shelving costs C) Having high quality standards for suppliers D) Utilizing specialized, automated equipment for consistent product buildup E) Using electronic tools to improve customer communications Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

32) Which type of strategy to attract customers should a firm that promotes quick and on time delivery utilize?

A) Quality B) Low cost C) Flexibility D) Dependability E) Accessibility Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

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33) Which type of strategy emphasizes low overhead and inventory, and a limited assortment of products to attract customers?

A) Flexibility B) Quality C) Low-cost D) Dependability E) Consistency Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

34) Which of the following can help firms become excellent in several capabilities?

A) Training managers to be flexible in decision making B) Focusing on quality products on every product line C) Using technology to increase dependability D) Learning to achieve more than one competence E) Producing consistent products over time Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

35) A company may achieve more than one competence over time, and eventually become excellent in several capabilities.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

36) A company should select the same kind of production used by most of its competitors.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

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37) Operations capability is a special ability that production does especially well to outperform the competition.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

38) What is an operations capability?

Answer: Operations capability refers to the activity or process that production does especially well. Each company's operations capability matches up with its business strategy so that the firm's activities, from top to bottom, are focused in a particular direction. For example, the operations capability of FedEx is dependability.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

39) Why does each company's operations capability match up with its business strategy?

Answer: Each company's operations capability matches up with its business strategy so that the firm's activities, from top to bottom, are focused in a particular direction. Aligning operations capability with business strategy helps to improve profitability. For example, FedEx focuses on dependability, which has made it a leader with business customers.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

40) In which way should firms determine the best way to select the kind of production that is best for them?

Answer: There is no one standard way for doing production, either for services or for goods.

Rather, it is a flexible activity that can be molded into many shapes to give quite different operations capabilities for different purposes. They aim to adopt the kind of production that achieves the firm's larger business strategy in the most efficient way possible.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 7.3: Explain how companies with different business strategies are best served by having different operations capabilities.

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41) Examining procedures step-by-step, to reduce inefficiency, most centrally involves which approach? A) Operations scheduling B) Performance analysis C) Value-added analysis D) Methods improvement E) Quality ownership Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning. 42) Machine, woodworking, and dry-cleaning shops typically use which type of layout? A) Product B) Customproducts C) Same-steps D) Hybrid E) Make-to-stock Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 7.4: Identify the major factors that are considered in operations planning. 43) Which type of layout is designed to move resources through a smooth, fixed sequence of steps? A) Same-steps B) Location C) Custom-products D) Quality E) Make-to-order Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

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44) Which of the following is an advantage of using a product layout plan?

A) They do not require specialized equipment.

B) They can be easily rearranged for new applications.

C) They can only be used for custom products.

D) They are inflexible in nature.

E) Unskilled labor can be utilized.

Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning.

45) Which term is defined as the combination of "characteristics of a product or service that bear on its ability to satisfy stated or implied needs"?

A) Quality B) Production C) Quantity D) Clarification E) Capacity Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

46) Performance refers to which of the following?

A) The principle that quality belongs to each person who creates it while performing a job B) The consistency of product quality from unit to unit C) How well the product does what it is supposed to do D) The process by which a company analyzes a competitor's products to identify desirable improvement E) Providing value by making products available when customers want them Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

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47) Consistency refers to which of the following?

A) The principle that quality belongs to each person who creates it while performing a job B) The sameness of product quality from unit to unit C) The sum of all activities involved in getting high-quality products into the marketplace D) The process by which a company analyzes a competitor's products to identify desirable improvements E) Providing value by making products available where customers want them Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

48) After designing operations systems, the identification of each production step, and the specific methods for performing it, leads to A) advance planning.

B) materials management.

C) methods improvement.

D) quality planning.

E) quality ownership.

Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

49) Which of the following is the amount of a product that a company can produce under normal working conditions?

A) Capacity B) Output C) Efficiency D) Burden E) Performance Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

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50) In which type of production layout are equipment and people grouped according to function?

A) Fixed position B) Same-steps C) Custom-products D) Supply-chain E) Service Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

51) Which term refers to how well a product does what it is supposed to do?

A) Capacity B) Consistency C) Reliability D) Performance E) Quality control Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

52) What type of planning has the greatest effect on production costs and flexibility relative to competitors?

A) Capacity B) Layout C) Quality D) Location E) Process Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning.

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53) Which of the following affects how efficiently a company can respond to demand for more or different products, and their ability to match competitors speed and convenience?

A) Location planning B) Quality planning C) Technology planning D) Long-range capacity planning E) Layout planning Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning.

54) What is the main advantage of effective process layouts?

A) Flexibility B) Cost C) Speed D) Quality E) Performance Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning.

55) When planning for quality, two key elements are A) speed and dependability.

B) consistency and accuracy.

C) flexibility and accuracy.

D) dependability and flexibility.

E) performance and consistency.

Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.4: Identify the major factors that are considered in operations planning.

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56) What can be used to identify the sequence of activities, movements of materials, and work performed?

A) Operations schedules B) Process flowcharts C) Gantt charts D) PERT charts E) Project schedules Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

57) Which of the following would be best used when producing make-to-stock or mass production products?

A) Fixed position layout B) Process layout C) Customer-product layout D) Operations scheduling layout E) Assembly line layout Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning.

58) When do organizations use fixed-position layouts for some goods or services?

A) When the customer requests it B) When it is more cost effective C) When it increases the quality level D) When it is difficult to move the good or service E) When consistency in production is needed Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.4: Identify the major factors that are considered in operations planning.

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59) Which of the following is dependent on how many people a firm employs and the number and size of its facilities? A) Quality B) Location planning C) Capacity planning D) Long-term capacity E) Proximity to customers Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.4: Identify the major factors that are considered in operations planning. 60) Which of the following considers both current and future requirements in capacity planning? A) Market share of competitors B) Long-range capacity C) Short-term goal setting D) Location planning E) Expansion Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.4: Identify the major factors that are considered in operations planning. 61) Which of the following is a key area of focus for consumer service organizations? A) Long-range capacity B) Expansion C) Methods planning D) Being near customers E) Forecasting Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.4: Identify the major factors that are considered in operations planning.

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62) CityCreations manufactures high quality leather goods and timepieces in the local community. All labor, equipment, materials, and other resources are brought to the company's location, where all production work is done. Which of the following describes this process layout?

A) Fixed-position B) Assembly line C) Product D) Same-step E) Process Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.4: Identify the major factors that are considered in operations planning.

63) A firm's capacity depends on both how many people it employs and the number and size of its facilities.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning.

64) Capacity planning should include both short-term and long-term goals.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning.

65) In a same-steps layout, equipment and people are set up to produce one type of good in a fixed sequence of steps and are arranged according to its production requirements.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

66) A process flowchart identifies the sequence of production activities, movements of materials, and work performed at each stage of the process.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.4: Identify the major factors that are considered in operations planning.

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67) A fixed-position layout is most effective when there is a large-volume make-to-stock operation in place. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning. 68) Quality includes factors such as price and dependability in delivering the promised benefits. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.4: Identify the major factors that are considered in operations planning. 69) Why is it important that a firm use long-range capacity planning? Answer: The amount of a product that a company can produce under normal conditions is its capacity. A firm's capacity depends on how many people the firm employs and the number and size of its facilities. Long-range capacity planning considers both current and future requirements. If capacity is too small for demand, the company must turn away customers, a situation that cuts into profits and alienates both customers and salespeople. If capacity greatly exceeds demand, the firm is wasting money by maintaining facilities that are too large, keeping excess machinery online, or employing too many workers. The stakes are high in capacity decisions: While expanding fast enough to meet future demand and to protect market share from competitors, managers must also consider the costs of expanding. When markets are growing, greater capacity is desirable.

In troubled times, however, existing capacity may be too large and too expensive to maintain, requiring a reduction in size. Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.4: Identify the major factors that are considered in operations planning. 70) Describe two alternatives for production facility layouts.

Answer: In a custom-products layout, equipment and people are grouped according to function; in a same-steps layout, equipment and people are set up to produce one type of product in a fixed sequence of steps and are arranged according to production requirements. A custom-products layout is well suited for make-to-order shops while a same-steps layout is efficient for make-to- stock operations. Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.4: Identify the major factors that are considered in operations planning.

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71) Describe the purpose of an assembly line layout and when a firm would choose to use this format.

Answer: A product layout (also called a same-steps layout or assembly line layout) is set up to provide one type of service or make one type of product in a fixed sequence of production steps.

All units go through the same set of steps. It is efficient for large-volume make-to-stock operations that mass-produce many units of a product quickly. A partially finished product moves step by step through the plant on conveyor belts or other equipment, often in a straight line, as it passes through each stage until the product is completed.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.4: Identify the major factors that are considered in operations planning.

72) Which of the following is a scheduling tool that breaks down large projects into steps to be performed and specifies the time required to perform each one?

A) Myers graphic B) Critical path chart C) Gantt chart D) Process analysis graph E) Master schedule Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

73) Which of the following tracks which service or products will be produced and when?

A) Master operations schedule B) Detailed schedule C) Gantt chart D) Staff schedule E) PERT chart Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

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74) Which scheduling tool shows the necessary sequence of activities in a project and identifies the critical path? A) Gantt chart B) Process flowchart C) Detailed schedule D) Master production schedule E) PERT chart Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 75) Which of the following would be used to provide coordination for completing large-scale projects? A) Master schedule B) Detailed schedules C) Staff schedules D) Project schedules E) Coordination schedules Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 76) Which of the following breaks large tasks down to a series of smaller steps, and includes all activities to successfully perform the task? A) Master schedule B) Coordination schedule C) Gantt chart D) Detailed schedule E) PERT chart Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

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77) Which of the following indicates the critical path needed for the completion of large projects?

A) Master schedule B) Coordination schedule C) Gantt chart D) Detailed schedule E) PERT chart Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

78) What is the main advantage of using a PERT chart on a large-scale project?

A) It aids in the ordering of supplies and materials.

B) It shows the most time-consuming path for project completion.

C) It allows managers to plan for delays.

D) It allows managers to monitor performance by comparing results with detailed schedules.

E) It identifies which tasks can be performed at the same time as others.

Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

79) Every day before work begins, Jesse, the manager of YumYum Chocolates, creates a schedule of all work assignments with start and stop times for each assigned job. Which of the following does Jesse use to manage the production process at YumYum Chocolates?

A) Master schedules B) Staff schedules C) Project schedules D) Detailed schedules E) PERT charts Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

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80) Which of the following is an advantage to using detailed scheduling to manager production?

A) Customer orders and information about equipment is considered in the schedule.

B) Financing decisions can be included in the research of new equipment.

C) Hiring and training needs can be addressed.

D) The number of employees needed per shift can be accurately determined.

E) Precise timing for the production of the products can be calculated.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

81) Which of the following is used to assign working times in upcoming days for each employee on each shift?

A) Gantt charts B) Detailed schedules C) Methods improvements D) Fixed positioning E) Staff schedules Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

82) Aesa is a hardworking and highly organized student. At the start of each semester, she creates a plan for all her classes. This plan indicates upcoming assignments with due dates, and includes every day of the upcoming semester. What type of schedule does Aesa use to outline all her classes as assignments.

A) Master B) Detailed C) Project D) Daily E) Staff Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

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83) Edouard has found that he likes to organize his class assignments and projects by week. Every Saturday he reviews what assignments he has due in the upcoming week, and uses a schedule to assign start and stop times for each assignment he wants to complete. Which of the following does Edouard use to schedule his class assignments?

A) Daily B) Staff C) PERT D) Master E) Project Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 84) Staff schedules identify which products will be produced and when. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 85) A detailed schedule will consider employees' needs and the company's efficiency and cost, including demand for production. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 86) If parts A, B, and C must be produced this week, a detailed schedule will indicate the sequence of work. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule.

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87) Operation plans cannot be developed until a master schedule has been provided.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 88) A critical path will indicate the most time-consuming path for project completion. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 89) Describe how a Gantt chart and a PERT chart are similar, and how they are different. Answer: Both are scheduling tools used in project management, and both break down a project into the steps to be performed and show the time needed for each step. The PERT chart shows the necessary sequence of activities and identifies the critical path, which is the most time- consuming set of activities and the Gantt chart doesn't. Thus, the PERT chart provides even more information than the Gantt chart. Project managers may use these tools to reassign workers and equipment to speed up late activities and stay on schedule. Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 7.5: Discuss the information contained in four kinds of operations schedules—the master operations schedule, detailed schedule, staff schedule, and project schedule. 90) Describe the purpose of a mater operations schedule and its relationship to other scheduling tools.

Answer: Once managers and their teams have determined the operations plans, they then develop timetables for implementing the plans. This aspect of operations, called operations scheduling, identifies times when specific activities will occur. There are four types of schedules: (1) The master schedule is "the game plan" for deciding the volume of upcoming activities for months ahead. (2) Detailed schedules show day-to-day activities that will occur in production. (3) Staff schedules identify who and how many employees will be working, and when. (4) Finally, project schedules provide coordination for completing large-scale projects. Scheduling of operations occurs at different levels. First, a top-level master operations schedule shows which services or products will be produced and when, in upcoming time periods. Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 7.5: Discuss the information contained in four kinds of operations schedules —the master operations schedule, detailed schedule, staff schedule, and project schedule.

27 .

91) In operations control, production managers monitor production performance by which method? A) Comparing results with detailed plans and schedules B) Checking on each worker on the production floor C) Observing activities from a platform above the workers D) Constantly talking with employees involved E) Performing spot checks of worker performance Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.6: Discuss the two key activities required for operations control. 92) What is the name for a production system in which all the needed materials and parts arrive at the precise moment they are required for each production stage? A) Quality control system B) Process control system C) Just-in-time production D) Standardized production E) Custom-products production Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control. 93) Which type of system is designed for smooth production flow to avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes? A) Quality system B) Lean system C) Managed system D) Production system E) Flexible system Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

28 .

94) Which term refers to the acquisition of the raw materials a company needs to produce its products?

A) Development B) Purchasing C) Goods control D) Quality control E) Wholesaling Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

95) Which of the following refers to the receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods?

A) Materials handling B) Inventory control C) Quality control D) Wholesaling E) Distribution control Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

96) Which department is responsible for ensuring that operations departments produce products that meet specific, predetermined standards?

A) Purchasing B) Production systems C) Quality control D) Productivity E) Marketing Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

29 .

97) How can managers and employees support quality control efforts within the organization?

A) Identify and correct mistakes and failures B) Pursue cost savings measures C) Develop project schedules such as Gantt or PERT charts D) Identify the critical path for activities of the project E) Outline the proper sequence of events before the process begins Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 7.6: Discuss the two key activities required for operations control.

98) Which of the following identifies the process of determining which outside firm will provide service and materials for the production process?

A) Materials management B) Purchasing C) Inventory control D) Inventories of information E) Supplier selection Answer: E Difficulty: Easy AACSB: Analytical thinking Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

99) Material management requires the negotiation of terms of service and maintaining the relationship between the buyer and those who sell the firm goods. Which process supports this activity?

A) Supplier selection B) Purchasing C) Inventory control D) Production E) Materials management Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 7.6: Discuss the two key activities required for operations control.

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100) Which material management process describes the movement of finished goods from a business to the customer?

A) Procurement B) Purchasing C) Inventory control D) Transportation E) Warehousing Answer: D Difficulty: Easy AACSB: Analytical thinking Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

101) Which material management process stores incoming materials for production and finished goods for distribution?

A) Warehousing B) Lean production C) Transportation D) Purchasing E) Supply chain Answer: A Difficulty: Easy AACSB: Analytical thinking Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

102) The process of planning, organizing, and controlling the flow of materials from sources of supply through the distribution of a finished good is called A) follow up.

B) materials management.

C) just-in-time.

D) purchasing.

E) operations control.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.6: Discuss the two key activities required for operations control.

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103) Which of the following is an advantage of JIT production?

A) Ability to use stop-and-go production B) Increased number of goods I process C) Minimized inventory cost D) Elimination of disruptions on the production line E) Specialization of employee skill sets Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.6: Discuss the two key activities required for operations control.

104) Which of the following is the first step in the quality control process?

A) Accessing inventories of information programs B) Supplier selection C) Inventory control D) Establishing JIT inventory levels E) Establishing specific standards and measurements Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.6: Discuss the two key activities required for operations control.

105) Just-in-time (JIT) production systems normally require large amounts of safety stock to be maintained in a firm's warehouse.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 7.6: Discuss the two key activities required for operations control.

106) Operations control includes materials management and quality control.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.6: Discuss the two key activities required for operations control.

107) Materials management involves the flow of materials inside of the production facility, while distribution management involves the flow of finished goods.

Answer: FALSE Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.6: Discuss the two key activities required for operations control.

32 .

108) Inventory control is the means of moving resources to the producer and finished goods to the customer.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 7.6: Discuss the two key activities required for operations control.

109) Managers use follow-up to ensure production decisions are being implemented.

Answer: TRUE Difficulty: Easy AACSB: Analytical thinking Question Category: Application LO: 7.6: Discuss the two key activities required for operations control.

110) Just-in-time production eliminates the need for transportation and warehousing.

Answer: FALSE Difficulty: Easy AACSB: Analytical thinking Question Category: Application LO: 7.6: Discuss the two key activities required for operations control.

111) Explain how JIT production and lean manufacturing are related.

Answer: Lean manufacturing is designed for smooth production flows that avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes. Just-in-time (JIT) production, a type of lean system, brings together all needed materials at the precise moment they are required for each production stage. With JIT production, disruptions are more visible and are resolved more quickly.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 7.6: Discuss the two key activities required for operations control.

112) Describe the activities associated with transportation, warehousing, and inventory control in the materials management process.

Answer: Transportation is the means of moving resources to the producer and finished goods to customers. Warehousing is the storage of both incoming materials for production and finished goods for distribution to customers. Inventory control includes the receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods. It ensures that enough materials inventories are available to meet production schedules, while at the same time avoiding expensive excess inventories.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.6: Discuss the two key activities required for operations control.

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113) Describe the purpose of quality control for goods and services.

Answer: Quality control is taking action to ensure that operations produce goods or services that meet specific quality standards. The high quality of customer-employee interactions is no accident in firms that monitor customer encounters and provide training for employee skills development. Many managers realize that without employees trained in customer-relationship skills, quality suffers, and businesses, such as airlines and hotels, can lose customers to betterprepared competitors.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.6: Discuss the two key activities required for operations control.

114) Which of the following terms includes all activities involved in getting quality products into the marketplace?

A) Quality control B) Quality reliability C) Total quality management D) Performance quality E) Quality overview Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

115) What should a firm use to evaluate the work activities, materials flow, and paperwork in an effort to determine how those activities provide benefit for the customers?

A) Value-added analysis B) Benchmarking C) Getting closer to the customer D) Supply chain management E) Follow-up Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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116) Which term describes the idea that quality belongs to each person who creates it while performing a job?

A) Quality control B) Quality ownership C) Quality circles D) Total quality management E) Quality improvement teams Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

117) What name is given to the process by which a company analyzes another company's product to identify desirable improvements in its own product?

A) Quality reliability analysis B) Benchmarking C) Performance quality analysis D) Competitive product analysis E) Quality outsourcing Answer: D Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

118) Which of the following is patterned after the successful Japanese concept of quality circles?

A) Supply chain management B) Quality improvement teams C) Total quality management D) Quality ownership E) Value-added analysis Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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119) Which of the following BEST describes total quality management?

A) The principle that quality belongs to each person who creates it while performing a job B) The consistency of a product's quality from unit to unit C) The sum of all activities involved in getting high-quality products into the marketplace D) The process by which a company analyzes a competitor's products to identify desirable improvements E) A certification program attesting that an operations process has met rigorous requirements Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

120) Which term refers to collaborative groups of employees from various work areas who meet regularly to define, analyze, and solve common production problems?

A) Quality improvement teams B) Quality assurance teams C) Quality control teams D) Quality evaluation teams E) Quality review teams Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

121) Which of the following BEST describes ISO 9000?

A) The concept that all employees are valuable contributors to a firm's business, and should be entrusted with decisions regarding their work B) The redesigning of business processes to improve performance, quality, and productivity C) A program certifying that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization D) A certification program attesting to the fact that a factory, laboratory, or office has improved environmental performance E) The process of evaluating all work activities to determine the value they add for customers Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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122) Which of the following BEST describes ISO 14000?

A) The concept that all employees are valuable contributors to a firm's business and should be entrusted with decisions regarding their work B) A certification program attesting to the fact that a factory, laboratory, or office has improved environmental performance C) A certification program attesting to the fact that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization D) A standardized method of evaluating a company's greenhouse gas emissions E) A certification program attesting to the fact that a factory, laboratory, or office is operating under free-trade principles Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

123) Which term refers to the fundamental rethinking and radical redesign of a business activity to achieve dramatic improvements in performance?

A) Supply chain management B) Business process reengineering C) Total quality management D) Quality ownership E) Quality control Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

124) Successful companies often focus total quality management efforts on both the quantity and quality of goods produced or delivered, known as A) cost of quality.

B) supply chain management.

C) material management.

D) productivity.

E) quality ownership.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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125) Which of the following is a measure of economic performance, based on the resource we use to produce a good or service?

A) Quality B) Productivity C) Control D) Building E) Differentiation Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

126) Which of the following is considered to be the first step in total quality management?

A) Identifying sources of poor quality B) Marshalling the interests of all stakeholders C) Evaluating the cost of poor quality D) Assigning responsibility for corrections E) Setting quality standards Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

127) Which of the following is considered to be one of the biggest challenges in total quality management?

A) Training employees on how to achieve quality goals B) Motivating employees and suppliers to achieve quality goals C) Encouraging teamwork and quality circles D) Compensating for quality E) Providing resources that foster a quality focus Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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128) What is the goal of quality improvement teams?

A) To select leaders in the workplace based on quality initiatives.

B) To identify areas of improvement for safety and health of employees.

C) To conduct competitive product analysis on a regular basis.

D) To improve their own work methods and the products they make.

E) To monitor participation in ISO 14000 efforts.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

129) Quality improvement teams are groups of employees from various work areas who define, analyze, and solve common production problems.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

130) Productivity is a measure of economic performance.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

131) The biggest challenge of total quality management is motivating employees throughout the company to achieve quality goals.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

132) Value-added analysis might focus on both the elimination of waste and cost minimization.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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133) ISO 9000 is a certification program attesting to the fact that a factory, laboratory, or office has improved its environmental performance.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

134) Japanese companies adapted the concept of quality circles from quality improvement teams used by U.S. companies.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

135) The sales department relies on the engineering department to send samples and quotes to prospective customers on a timely basis. The sales department may be considered the engineering department's internal customer.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

136) Explain competitive product analysis.

Answer: Competitive product analysis is a process by which a company analyzes a competitor's products to identify desirable improvements in its own products. For example, a small business owner might study a competitor's Web site to find ways to improve her own site.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

137) In a total quality management environment, what are some steps that companies use to emphasize the importance of quality?

Answer: To ensure high-quality goods and services, many firms assign responsibility for some aspects of TQM to specific departments or positions. More broadly, leaders of the quality movement use various methods and resources to foster a quality focus-training, verbal encouragement, teamwork, and tying compensation to work quality. Total quality management (TQM) includes all the activities necessary for getting high-quality goods and services into the marketplace.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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138) Describe the five most commonly used tools for TQM. Answer: The most commonly used tools for TQM are valued-added analysis, quality improvement teams, getting closer to the customer, the ISO series, and business process reengineering. Value-added analysis refers to the evaluation of all work activities, material flows, and paperwork to determine the value that they add for customers. Quality improvement teams are groups of employees from various work areas who meet regularly to define, analyze, and solve common production problems. Getting closer to the customer involves taking steps to know what customers want in the products they consume. The ISO series pertains to a series of certifications attesting that a factory, laboratory, or office adheres to rigorous quality management requirements set by the International Organization for Standardization. Business process reengineering focuses on improving a business process-rethinking each of the process's steps by starting from scratch. The process yields improvements as measured by cost, quality, speed, and service. TQM begins with leadership and a desire for continuously improving both processes and products. It must consider all aspects of a business, including customers, suppliers, and employees.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

139) Describe the relationship between a firm's productivity level and a country's GDP. Answer: Productivity is a measure of economic performance: It compares how much we produce with the resources we use to produce it. The formula is fairly simple. The more services and goods we can produce while using fewer resources, the more productivity grows and the more everyone–the economy, businesses, and workers–benefits. At the national level, the most common measure is called labor productivity, because it uses the amount of labor worked as the resource to compare against the benefits, the country's GDP, resulting from using that resource.

When consumers buy, or don't buy what is produced, GDP increases, or suffers and productivity falls. Producing quality, then, means creating fitness for use–offering features that customers want.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

140) Discuss ways in which quality ownerships supports total quality management.

Answer: The backbone of TQM, and its biggest challenge, is motivating all employees and the company's suppliers to achieve quality goals. Leaders of the quality movement use various methods and resources to foster a quality focus, such as training, verbal encouragement, teamwork, and tying compensation to work quality. When those efforts succeed, employees and suppliers will ultimately accept quality ownership, the idea that quality belongs to each person who creates it while performing a job.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.7: Identify the activities and underlying objectives involved in total quality management.

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141) Which term refers to the flow of information, materials, and services from rawmaterials suppliers through stages in the operations process until the product reaches the end customer? A) Total quality management B) Supply chain C) Service channel D) Distribution channel E) Performance channel Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. 142) Which term refers to the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services? A) Outsourcing B) Reengineering C) Controlling D) Scheduling E) Warehousing Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. 143) Which of the following BEST describes supply chain management? A) The principle of improving the production by focusing on the slowest step in the chain B) A limitation on the number of suppliers allowed to supply a particular company C) Complete movement of raw materials throughout a manufacturing or service facility D) A cost-reduction program in which wholesalers and retailers are eliminated in an effort to entice consumers to purchase directly from manufacturers E) The principle of looking at the supply chain as a whole in order to improve the overall flow through the system Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms.

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144) When a company shares information to improve the overall flow through a system composed of companies working together, it is engaging in which of the following?

A) Distribution chain management B) Total quality management C) Supply chain management D) Service channel analysis E) Supplier selection analysis Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms.

145) Which of the following is an advantage for each of the supply chain members?

A) Less emphasis on customer satisfaction B) Increased competitive advantage C) ISO certification D) Less need for outsourcing E) Higher inventory levels Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms.

146) A supply chain includes an entire network of firms, beginning with suppliers and ending when production is complete.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms.

147) Because supply chain strategy is based on the collective effort of a number of firms, no one firm in the chain gains a competitive advantage.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms.

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148) Each stage in the supply chain adds value for the final customer. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. 149) The goal of supply chain management is better overall flow in the system. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. 150) A supply chain can be expanded through outsourcing. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. 151) What is a supply chain? How can supply chain management create competitive advantage? Answer: A supply chain is the flow of information, materials, and services that starts with raw materials suppliers and continues through other steps in the operations process until the product reaches the end consumer. Supply chain management creates better value for the customer to produce a competitive advantage for the members of the chain. Dell, Inc. has used an innovative supply chain strategy to help lower prices and speed delivery of its PCs. Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms.

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152) How does outsourcing affect global supply chain management? Answer: Outsourcing is the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services. Arrangements for cross-border materials flows require compliance with each country's commerce regulations. Production and global transportation scheduling are coordinated with U.S. market demand so that outsourced products arrive in the correct amount and on time without harming the manufacturer's image. Outsourcing has been a growing trend in American business. Outsourcers have a greater need of operations skills for integration among dispersed facilities. Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. 153) Outsourcing has led to increasingly global supply chains. Describe three ways that a more global supply chain might be risky for a company that outsources. Answer: While outsourcing has usually been profitable, it has some risks. Global supply chains are more vulnerable to natural disasters, such as the earthquake and tsunami in Japan and flooding in Thailand. Political unrest in other countries is also a risk. Some countries have nationalized businesses without warning to the companies. It is possible that U.S. lawmakers could impose laws discouraging outsourcing. Criminal activities and even war could also disrupt supply chains. Outsourcing expands supply chains and increases their complexity. Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms. 154) In which way will process improvement affect the supply chain? Answer: Process improvements and reengineering often are applied in supply chains to lower costs, speed up service, and coordinate flows of information and material.

Because the smoother flow of accurate information along the chain reduces unwanted inventories and transportation, avoids delays, and cuts supply times, materials move faster to business customers and individual consumers. SCM offers faster deliveries and lower costs than customers could get if each member acted only according to its own operations requirements. Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 7.8: Explain how a supply chain strategy differs from traditional strategies for coordinating operations among firms.

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Business Essentials, 13e (Ebert/Griffin) Chapter 8 Employee Behavior and Motivation 1) Which of the following is the term for behavior that an employer expects employees to display?

A) Performance behavior B) Interpersonal behavior C) Disruptive behavior D) Potential behavior E) Assertive behavior Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

2) Which would an employee who is productive but refuses to help others or the organization be lacking in?

A) Organizational citizenship B) Workplace aggression C) Performance behavior D) Personal productivity E) Self-esteem Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

3) Behaviors that detract from, instead of contribute to, organizational performance are known as what?

A) Inclusive B) Negative reinforcement C) Counterproductive D) Turnover E) Associative Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

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4) Which of these behaviors BEST indicates good organizational citizenship?

A) Being willing to help new employees B) Asking for a pay raise C) Meeting job performance standards D) Keeping regular hours E) Using office supplies for business use Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

5) In what way does absenteeism result in a direct cost to a business?

A) Additional training must be provided to coworkers.

B) Turnover among high quality employees increases.

C) Burnout and psychological distress increases for those who are on the job.

D) There is confusion about authority roles within the organization.

E) A substitute must do the work of the missing employee.

Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

6) Which of the following is the overall pattern of action by members of an organization that directly or indirectly influence the organization's effectiveness?

A) Personality traits B) Agreeableness C) Employee behavior D) Counterproductive behaviors E) Individual differences Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

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7) Which of the following is the total set of work-related behaviors that the employer expects employees to display?

A) Counterproductive behaviors B) Performance behaviors C) Organizational citizenship D) Agreeableness E) Self-motivation Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

8) Which organizational behavior is counterproductive to an organization?

A) High levels of corporate citizenship B) Working beyond the normal scope of the job C) High levels of quantity and quality D) Leaving the organization for a new job E) Helping newcomers learn about corporate culture Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

9) Amira was very unhappy at her job. After several interviews she found a new job and quit.

Which of the following is the result of Amira's leaving the organization?

A) Turnover B) Absenteeism C) Organizational citizenship D) Performance behavior E) Emotionality Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

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10) Which of the following occurs when there is turnover within the organization?

A) Changes in corporate culture B) Increased organizational citizenship behavior C) Increased absenteeism D) Poor person-job fit E) Lost productivity Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

11) Performance behaviors contribute directly to company productivity.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

12) Organizational commitment reflects an individual's identification with the organization and its mission.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

13) Organizational citizenship reflects the ability of a behavior to detract from, rather than contribute to, organizational performance.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

14) Counterproductive behaviors such as absenteeism result in direct costs to a business.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

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15) What are some potential consequences of employees being dissatisfied on the job?

Answer: Dissatisfied employees may be absent more often, may experience stress that disrupts coworkers, and may be continually looking for another job. Unlike dissatisfied employees, satisfied employees tend to be absent less often, to be good organizational citizens, and to stay with the organization.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

16) Discuss the three types of employee behaviors and how they affect the organization.

Answer: Employee behavior is the pattern of actions by the members of an organization that directly or indirectly influences the organization's effectiveness. Organizational citizenship, provide positive benefits to the organization but in more indirect ways. Some employee behaviors, called performance behaviors, directly contribute to productivity and performance.

Counterproductive behaviors detract from performance and actually cost the organization.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

17) Discuss organizational citizenship and the outcomes of positive organizational citizenship for the organization.

Answer: Organizational citizenship refers to the behavior of individuals who make a positive overall contribution to the organization. A number of factors, including individual, social, and organizational variables, play roles in promoting or minimizing organizational citizenship behaviors. For example, the personality, attitudes, and needs of the individual may cause some people to be more helpful than others. Similarly, the individual's work group may encourage or discourage such behaviors. And the organization itself, especially its corporate culture, may or may not promote, recognize, and reward these types of behaviors.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

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18) Identify ways in which counterproductive behaviors on the job affect the success of the organization.

Answer: Counterproductive behaviors are those that detract from, rather than contribute to, organizational performance. Absenteeism occurs when an employee does not show up for work.

When an employee is absent, legitimately or not, his or her work does not get done at all, a substitute must be hired to do it, or others in the organization must pick up the slack. In any event, absenteeism results in direct costs to a business. Turnover occurs when people quit their jobs. An organization usually incurs costs in replacing workers who have quit, lost productivity while seeking a replacement, training someone new, and so on. Other forms of counterproductive behavior may be even more costly for an organization. Theft and sabotage result in direct financial costs for an organization. Sexual and racial harassment also cost an organization, both indirectly (by lowering morale, producing fear, and driving off valuable employees) and directly (through financial liability if the organization responds inappropriately). Workplace aggression and violence are also a concern in some organizations, as is bullying.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

19) Discuss ways in which absenteeism affects coworkers and the organization.

Answer: Absenteeism is a counterproductive behavior that occurs when an employee does not show up for work. Some absenteeism has a legitimate cause, such as illness, jury duty, or death or illness in the family. Other times, the employee may report a feigned legitimate cause that's actually just an excuse to stay home. When an employee is absent, legitimately or not, his or her work does not get done at all or his or her work may be completed by a temp or another employee. In any event, though, absenteeism results in direct costs to a business.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.1: Identify and discuss the basic forms of behaviors that employees exhibit in organizations.

20) Which of these "big five" personality traits is an indication of how open or rigid a person is in terms of his or her beliefs?

A) Openness B) Extraversion C) Emotionality D) Conscientiousness E) Agreeableness Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

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21) Which of the following describes emotionality?

A) The ability of a person to get along with others B) The degree to which someone tends to be positive or negative in their outlook C) The number of things a person tries to accomplish at once D) The relative rigidity of an individual's beliefs E) The likelihood that a person will react aggressively Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

22) Which of the following might a manager expect to see in an employee who has a low degree of conscientiousness?

A) A tendency to be unprepared at meetings B) A tendency to have a high degree of performance C) A tendency to focus on relatively few tasks at one time D) A high level of organization and self-discipline E) An ability to meet deadlines without fail Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

23) If a task involves a high level of detail, which type of personality would be best suited to perform the task?

A) One who exhibits high agreeableness B) One who exhibits more negative emotionality C) One who exhibits high openness D) One who exhibits high conscientiousness E) One who exhibits high creativity Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.2: Describe the nature and importance of individual differences among employees.

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24) The extent to which people are self-aware, able to manage their emotions, and motivate others is an aspect of which of the following?

A) Attitude B) Emotional intelligence C) Negative emotionality D) Social skills E) Empathy Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

25) Which of the following is represented by a relatively stable set of psychological attributes that distinguish people from others?

A) Differences B) Attitude C) Personality D) Extroversion E) Emotional intelligence Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

26) If an employee has a tendency to focus on relatively few tasks at one time, what type of personality trait is considered to be high?

A) Agreeableness B) Conscientiousness C) Emotionality D) Extraversion E) Openness Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

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27) Which of the following best represent the personality attributes of someone who is considered to be an extrovert? A) Forgiving, understanding, and good natured B) Organized, systematics, and self-disciplined C) Calm, resilient, and secure D) Sociable, assertive, and open to new relationships E) Curious, willing to listen to new ideas, and willing to change their own beliefs Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees. 28) According to the Myers-Briggs framework, how do introverts recharge their energy levels? A) By being around others B) When considering abstract ideas C) When completing or finishing an assignment or project D) By having time to process open-ended situations E) By being alone and having solitude Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees. 29) What is the term that reflects the extent of one's self awareness and ability to manage emotions? A) Emotional intelligence B) Personality C) Introversion D) Openness E) Emotionality Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

9 .

30) Which of the following best describes empathy?

A) The ability to balance fear, anxiety, and anger B) The ability to remain optimistic and continue to strive when facing setbacks C) The ability to understand how others feel D) The ability to get along with others E) The ability to establish positive relationships Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

31) Which is the correct term for one's belief that their behavior has an effect on what happens to them?

A) Self-efficacy B) Authoritarianism C) Self-esteem D) Locus of control E) Risk propensity Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

32) Which of the following is based on the knowledge a person presumes to have about perceptions of truth and reality?

A) Affect B) Intention C) Attitude D) Personality E) Cognition Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

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33) Which of the following is used to guide a person's behavior? A) Affect B) Intention C) Attitude D) Personality E) Cognition Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees. 34) What is the result of a person behaving in a way that is inconsistent with their attitudes? A) Affect B) Lapsed morale C) Increased satisfaction D) Cognitive dissonance E) Impairment Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

35) What is the outcome when employees have positive attitudes towards their jobs?

A) Increased cognitive dissonance B) Decreased morale C) Stronger intention D) Limited commitment E) Increased job satisfaction Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.2: Describe the nature and importance of individual differences among employees.

11 .

36) When an employee sees themselves as a member of the team and can easily identify with the organization's mission, what is the result?

A) Organizational commitment B) Psychological contracts C) Cognitive dissonance D) Intention E) Cognition Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

37) Which term, similar to emotions, identifies a person's feelings about something?

A) Affect B) Intention C) Cognitive dissonance D) Cognition E) Morale Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

38) How willing a person is to take chances in their decision process indicates a person's A) self-esteem.

B) locus of control.

C) risk propensity.

D) self-efficacy.

E) cognitive dissonance.

Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.2: Describe the nature and importance of individual differences among employees.

12 .

39) Those employees who like to experiment with new ideas or gamble on the development of new products are considered to have a higher degree of A) self-esteem.

B) intrinsic reward need.

C) authoritarianism.

D) propensity for risk.

E) cognition.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

40) If an employee feels they have the skills and ability needed to perform a task well, they are better able to focus their attention on performance because of their high degree of A) self-esteem.

B) locus of control.

C) risk propensity.

D) self-efficacy.

E) cognitive dissonance.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

41) Research suggests that the major personality dimension that exists in a variety of countries, and is therefore reasonably important across cultures is A) attitude.

B) cognition.

C) intention.

D) commitment.

E) self-esteem.

Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

13 .

42) Janelle generally is late for work, and most meetings, and does an excellent job when meeting with customers. Marc loves to design new product descriptions, and is highly focused when at work. Moira takes great pride in her work and is often very emotionally attached to her efforts. Which of the following describes these personal attributes that vary from one person to another?

A) Self-esteem B) Self-efficacy C) Empathy D) Personality E) Individual differences Answer: E Difficulty: Difficult AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

43) In addition to the "big five" personality traits identified by researchers as being especially relevant to organizations, which of the following also plays a large role in employee personality?

A) Emotional intelligence B) Agreeableness C) Personality D) Conscientiousness E) Extraversion Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

44) Nancy is often short with people, is antagonistic towards others, and is generally considered to be rude. Which of the describes Nancy's personality trait?

A) High levels of consciousness B) Negative emotionality C) More extroverted D) Low agreeableness E) Less openness Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

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45) Apoorva is generally good natured and understanding when it comes to working with others. In which "big five" personality trait would Apoorva score high in? A) Conscientiousness' B) Emotionality C) Agreeableness D) Introversion E) Openness Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees. 46) Who tends to be relatively high performers in a variety of different jobs? A) Those who are most agreeable B) Those who are highly conscientious C) Those who tend to be most positive D) Those who are most comfortable in relationships E) Those who are less rigid in terms of their beliefs Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees. 47) Mohammad is a highly reliable employee, and handles job stress, pressure, and tension well. In general, Mohammad is posed, calm and resilient. Which of the following does Mohammad display a positive degree of? A) Conscientiousness B) Emotionality C) Extroversion D) Openness E) Agreeableness Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

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48) The manager of the sales and marketing department is interviewing candidates for sales position. Which of the following should the manager look for in the candidates they are interviewing?

A) Extraversion B) Low degree of openness C) Negative emotionality D) High degree of sensing E) The ability to judge instead of perceive Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

49) Which of the following describes someone with a low level of openness?

A) Curious B) Willing to listen to new ideas C) Less receptive to new ideas D) Willing to change their mind E) Higher degree of acceptance by others Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

50) Julian prefers abstract concepts to concrete things. Which section of the Myers' Briggs framework would measure this?

A) Extraversion B) Perceiving C) Thinking D) Intuition E) Feeling Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

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51) Researchers agree that the Myers-Briggs Type Indicator can be a useful method for determining some aspects of what?

A) Extroversion B) Conscientiousness C) Emotional intelligence D) Personality attributes E) Communication styles Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

52) Which aspect of the Myers-Briggs Type Indicator indicates whether a person bases their decision on logic and reason, or emotions?

A) Extraversion versus introversion B) Sensing versus intuition C) Empathy versus motivating D) Thinking versus feeling E) Judging versus perceiving Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

53) Which of the following is an indication of a person's capacity for understanding how she or he is feeling, and using that to effectively guide their own lives and behaviors?

A) Empathy B) Social skills C) Motivating oneself D) Self-awareness E) Managing emotions Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

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54) Raj just left a meeting with his customer, who once again changed their requirements.

This change requires Raj to scrap the work he has done so far, and start all over again.

Still, Raj remains optimistic and wants to works hard to ensure the customer is happy with the final results. Which area of emotional intelligence is Raj using to get the job accomplished? A) Self-awareness B) Empathy C) Managing emotions D) Motivating oneself E) Social skills Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees. 55) Myron is being trained to take over a large project with a new customer, and it is important that he have a high degree of interpersonal interaction with the customer, and be able to direct the work of others successfully. What type of skills should Myron be working on developing? A) High degree of self-motivation B) Sensing and intuition skills C) Low judgment and high perceiving skills D) High emotional quotient E) Introversion Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees. 56) Drew works hard and is a very motivated employee. He wants to move into a leadership position in his company and feels that if he works hard, he will succeed. Which of the following does Drew have a high level of? A) Locus of control B) Self-efficacy C) Authoritarianism D) Machiavellianism E) Self-esteem Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

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57) Byron accepts instructions and directives from his managers without question, even if he sometimes doesn't agree the outcome will be as good as it could be. Which of the following personality characteristics would Bryon be rated highly in?

A) Authoritarianism B) Self-efficacy C) Locus of control D) Machiavellianism E) Judgement Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

58) Leslie is constantly manipulating others for her own personal gain. She will lie to attain a personal goal, and puts little value on loyalty. In which personality characteristic would Leslie be rated highly in?

A) Locus of control B) Self-efficacy C) Authoritarianism D) Machiavellianism E) Risk propensity Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

59) Which of the following is the personal belief that one is a worthwhile and deserving individual?

A) Self-awareness B) Empathy C) Social skills D) Self-esteem E) Locus of control Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

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60) Which of the following is a person's beliefs and feelings about specific ideas, situations, or people?

A) Intention B) Cognitive dissonance C) Attitudes D) Self-esteem E) Emotion Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

61) Which of the following occurs when two sets of perceptions are contradictory or incongruent?

A) Risk B) Intention C) Cognitive dissonance D) Self-awareness E) Emotionality Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

62) Which of the following reflects an individual's identification with the organization and its mission?

A) Intention B) Psychological contracts C) Cognitive dissonance D) Job satisfaction E) Organizational commitment Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

63) Balancing anxiety, fear, and anger so they do not overly interfere with getting things accomplished is a part of emotional intelligence.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

20 .

64) According to research, emotional intelligence cannot be developed or learned.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

65) Personality includes personal attributes that vary from one person to another.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

66) Affect is one of the three components of attitude.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.2: Describe the nature and importance of individual differences among employees.

67) Emotional intelligence and personality are generally considered to be the same thing.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.2: Describe the nature and importance of individual differences among employees.

68) A person's self-efficacy is a belief about their extent of power and status within the organization.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

21 .

69) Identify and explain each of the "Big Five" personality traits.

Answer: The "Big Five" personality traits are agreeableness, conscientiousness, emotionality, extraversion, and openness. Agreeableness is a person's ability to get along with others.

Conscientiousness refers to the individual's persistence, dependableness, and orderliness.

Emotionality refers to the degree to which people tend to be positive or negative in their outlook and behaviors toward others. Extraversion refers to a person's comfort level with relationships.

Extraverts are sociable, talkative, assertive, and open to new relationships and tend to be higher performers. Finally, openness is how open or rigid a person is in terms of his or her beliefs.

People with a high level of openness are curious and willing to listen to new ideas and, therefore, are often higher performers.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 8.2: Describe the nature and importance of individual differences among employees.

70) Discuss how an employee's level of self-esteem affects their actions and needs at the workplace.

Answer: Self-esteem is the extent to which a person believes that he or she is a worthwhile and deserving individual. A person with high self-esteem is more likely to seek higher-status jobs, be more confident in his or her ability to achieve higher levels of performance, and derive greater intrinsic satisfaction from his or her accomplishments. In contrast, a person with less self-esteem may be more content to remain in a lower-level job, be less confident of his or her ability, and focus more on extrinsic rewards (extrinsic rewards are tangible and observable rewards such as a paycheck, job promotion, and so forth).

Difficulty: Difficult AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

71) Describe emotional intelligence and the various dimension that are associated with it.

Answer: Emotional intelligence, or emotional quotient (EQ), refers to the extent to which people are self-aware, can manage their emotions, can motivate themselves, express empathy for others, and possess social skills. Self-awareness refers to a person's capacity for being aware of how she or he is feeling. In general, more self-awareness allows people to more effectively guide their own lives and behaviors. Managing emotions refers to a person's capacities to balance anxiety, fear, and anger so that these feelings do not overly interfere with getting things accomplished. Motivating oneself is a person's ability to remain optimistic and to continue striving in the face of setbacks, barriers, and failure. Empathy is a person's ability to understand how others are feeling even without being explicitly told. Social skills help people get along with others and establish positive relationships.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Application LO: 8.2: Describe the nature and importance of individual differences among employees.

22 .

72) Which of the following identifies what the organization will provide the employee and what the employee will contribute to the organization in turn?

A) Person-job fit B) Psychological contract C) Inducements D) Contributions E) Motivation contract Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

73) How can an organization fulfill their organization's contract obligations to employees?

A) Contributions B) Psychological contracts C) Inducements D) Intention E) Cognition Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

74) Which of the following aspects of the psychological contract is provided by the organization?

A) Competency B) Effort C) Time D) Career opportunities E) Talent Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

23 .

75) Which of the following aspects of the psychological contract is provided by the employee? A) Benefits B) Pay C) Skills D) Security E) Status Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace. 76) What is the term for the extent to which a person's contributions and the organization's inducements match? A) Employee equity B) Person-job fit C) Psychological contract D) Organizational commitment E) Job satisfaction Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace. 77) Which of the following is likely to occur when the employee and the employer perceive the psychological contract to be fair and equitable? A) The employee will work towards promotion B) The relationship will continue C) The employer will provide pay raises D) Change will be initiated E) The employee will be transferred to a more challenging position Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

24 .

78) Marian's company is in the process of downsizing and many employees are unsure of what to expect. Which of the following can the company use to manage the psychological contracts it has with employees?

A) Loyalty B) Increased competency requirements C) Guarantee of job permanence D) Higher standards of performance E) Additional training Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

79) Which of the following is the outcome when there is good person-job fit?

A) Additional wants and needs B) Additional inducements C) Higher performance D) Negative attitudes E) Increased turnover Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

80) In terms of a psychological contract, inducements represent what employees will contribute to an organization.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

81) The good person-job fit can result in higher performance and more positive attitudes.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

25 .

82) Describe the role of the psychosocial contract between an organization and its employees.

Answer: A psychological contract is the overall set of expectations held by employees and the organization regarding what employees will contribute to the organization and what the organization will provide in return. Unlike a formal business contract, a psychological contract is not written on paper, nor are all of its terms explicitly negotiated. Employees provide effort, ability, loyalty, skills, time, and competency. In return, employers provide pay, benefits, job security, status, promotion opportunities, and career opportunities.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

83) Describe the importance of person-job fit.

Answer: The person-job fit refers to the extent to which a person's contributions and the organization's inducements match one another. A good person-job fit is one in which the employee's contributions match the inducements the organization offers. In theory, each employee has a specific set of needs that he or she wants fulfilled and a set of job-related behaviors and abilities to contribute. If the organization can take perfect advantage of those behaviors and abilities and exactly fulfill those needs, it will have achieved a perfect person-job fit. Good person-job fit, in turn, can result in higher performance and more positive attitudes. A poor person-job fit, though, can have just the opposite effects.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.3: Explain the meaning and importance of psychological contracts and the person-job fit in the workplace.

84) Which of the following describes the set of forces that cause people to behave in a certain way on the job?

A) Person-job fit B) Inducements C) Pay D) Psychological contracts E) Motivation Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

26 .

85) Which of the following describes the Hawthorne effect?

A) The belief that employees are motivated by money alone B) The conclusion that workers are more productive if management pays attention to them C) The determination that the level of lighting in a workplace has no effect on productivity D) The theory that workers are more productive if their jobs are analyzed closely E) The unspoken agreement between the employee and the employer Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

86) What is the value in understanding the differences in Theory X and Theory Y? A) They shed light on managers' attitudes toward employees.

B) They provide a useful blueprint for taking action.

C) They help managers better understand employees.

D) They accurately depict the attitude of employees at work.

E) They support management decisions and plans.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

87) According to Maslow's model, a set of needs will be a motivator until which of the following occurs?

A) The needs are satisfied.

B) New needs are identified.

C) The person becomes self-motivated.

D) A supervisor changes the work.

E) The needs are replaced by hygiene factors.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

27 .

88) Which of the following lists Maslow's Hierarchy of Human Needs in order, starting with the most basic?

A) Physiological, security, social, esteem, self-actualization B) Social, security, physiological, esteem, self-actualization C) Physiological, self-actualization, security, esteem, social D) Physiological, esteem, security, social, self-actualization E) Esteem, self-actualization, social, physiological, security Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

89) If a manager believes that his employees are self-motivated and growth-oriented, which theory of motivation does he subscribe to?

A) Theory Y B) Theory X C) Classical D) Hierarchical E) Expectant Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

90) Which of the following theories focuses on people evaluating their treatment by the organization relative to the treatment of others?

A) Equity theory B) Hierarchy of needs C) Expectancy theory D) Goal-setting theory E) X and Y theory Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

28 .

91) The classical theory of motivation is best described as a theory of motivation which states A) job satisfaction depends on two factors, hygiene and motivation.

B) people are motivated to work toward rewards that they want and that they have a reasonable chance of obtaining.

C) people evaluate their treatment by the organization relative to the treatment of others.

D) workers are motivated solely by money.

E) people will work more productively as long as they receive some kind of attention from management.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

92) Which of the following helps explain why some people do not work as hard as they can when their salaries are based purely on seniority?

A) Two-factor theory B) Maslow's hierarchy of human needs C) Scientific management D) Expectancy theory E) Theory X and Theory Y Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

93) The most productive employee in the department doesn't apply for a job opening they are well suited for, in spite of an excellent record and the pay and prestige associated with the new job. The employee believes that the job will go to someone who has more seniority. Based on expectancy theory, which would explain why the employee doesn't apply for the job?

A) The effort-performance issue B) The equity theory issue C) The performance-reward issue D) Personal goals E) Family demands Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

29 .

94) An employee is encouraged to apply for a promotion, but does not because he has children and wants to be home in the evening. Based on expectancy theory, which of the following explains why the employee doesn't apply for the job?

A) The equity theory issue B) The rewards-personal goals issue C) The performance-rewards issue D) The rewards-ethics issue E) The ethics-performance issue Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

95) A manager wants to motivate the maintenance staff to be more productive. She starts by providing training and assures employees that high productivity will be rewarded. Employees are asked to identify the rewards that would mean the most to them. The manager likely subscribes to which theory of motivation?

A) Equity B) Expectancy C) Two-factor D) Hierarchy of needs E) Productivity Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

96) An employee's level of effort began to decline when they learned a new employee with far less experience was hired at the same salary. The employee's lack of motivation can best be described by which theory of motivation?

A) Equity B) Expectancy C) Two-factor D) Scientific management E) Planning Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

30 .

97) Which of the following would BEST show that a manager's strategy for motivating his team is consistent with "Theory Y" about employee motivation? A) The employees would need to see incentives as worth having for their own sake. B) The employees would need to see their work as contributing to a success that they share in. C) The manager wants his team to feel rewards will increase as the quality of work is increased. D) The manager thinks that his team will not do their work well without added incentives. E) The manager thinks that incentives are needed in order to boost morale. Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation. 98) If, instead of offering incentives for sales goals, a manager were to get ideas on increasing sales revenue from his sales team to implement, which of the following would MOST likely result? A) The sales team would be more motivated by feeling more invested in the process. B) The sales team would prefer to be given clearly defined goals to meet. C) The sales team would not have enough information to go on in order to get ideas. D) The sales team would come up with too many different ideas. E) The sales team would be more motivated because of the chance to earn more money. Answer: A Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation. 99) Which of the following supports the belief that people are naturally lazy and must be punished or rewarded to be made productive? A) Hierarchy of human needs B) Theory X C) Theory Y D) Two-factor theory E) Expectancy theory Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

31 .

100) According to McGregor, which motivational theory will result in managers most likely having satisfied and motivated employees?

A) Hierarchy of human needs B) Theory X C) Theory Y D) Two-factor theory E) Expectancy theory Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

101) According to Frederick Herzberg, which of the following is considered a hygiene factor?

A) Recognition B) Hours C) Working conditions D) Additional time off E) Added responsibility Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

102) According to McClelland, what is the need for achievement based on?

A) The desire to control one's environment B) The desire to increase job satisfaction C) Recognition for a job well done D) The desire to accomplish a goal or task as effectively as possible E) The need for promotions Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

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103) According to McClelland, what do employees experience when they tend to want reassurance and approval from others and are genuinely concerned about others' feelings?

A) The need for power B) The need for satisfaction C) The need for achievement D) The need for motivation E) The need for affiliation Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

104) According to McClelland, which of the following represents the desire to control one's environment?

A) The need for power B) The need for satisfaction C) The need for achievement D) The need for motivation E) The need for affiliation Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

105) Which of the following indicates that an employee will work towards their goals if they believe they have a reasonable opportunity to achieve those goals?

A) Equity theory B) Expectancy theory C) Maslow's hierarchy of needs D) Hygiene factors E) Herzberg's two-factor theory Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

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106) Which motivational theory focuses on social comparisons as a motivator?

A) Equity theory B) Expectancy theory C) Power theory D) Hygiene factors E) Herzberg's two-factor theory Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

107) Which motivation model suggests that there are five levels of needs and that basic needs must be met before people work to satisfy higher-level needs?

A) Theories X and Y B) Hierarchy of Human Needs model C) Classical theory of motivation D) Scientific management E) Hawthorne effect Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

108) According to Maslow's Hierarchy of Human needs, which of the following is fulfilled by a meaningful and fulling job?

A) Esteem needs B) Social needs C) Physiological needs D) Self-actualization needs E) Security needs Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

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109) Which theory of motivation claims that hygiene factors affect motivation and satisfaction only when they are absent or do not meet expectations?

A) Maslow's hierarchy of Needs model B) McGregor's Theory X and Theory Y model C) Herzberg's Two-factor theory D) Taylor's classical theory of motivation E) Scientific management Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

110) Kendra just finished taking an exam that she had been studying hard for all week. She stayed after class and asked her professor to grade her exam while she waited. Which type of need does Kendra have in regards to her exam score?

A) Expectancy B) Power C) Motivation D) Affiliation E) Achievement Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

111) Which of the following is an indication of an individual's desire for human companionship?

A) Need for affiliation B) Need for power C) Need for achievement D) Esteem needs E) Physiological needs Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

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112) According to the classical theory of motivation, attention from the supervisor is more of a motivator than money.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

113) The two-factor theory examines the relationship between effort and performance.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

114) According to expectancy theory, people are motivated to work toward rewards they want and that they believe they have a reasonable chance of obtaining.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

115) When people feel they are being inequitably treated, they are likely to ask for raises, increase their efforts, and work longer hours.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

116) Hygiene factors affect motivation only if they are absent or fail to meet expectations.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

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117) Motivation factors are directly related to the work that employees perform; hygiene factors refer to the environment in which they work.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

118) According to Maslow's hierarchy of needs, a person can work on multiple levels of needs at the same time.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

119) Individuals may satisfy social needs by making and maintaining friendships at work.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

120) Equity theory is based on the premise that workers prefer a workplace where all employees are paid equally.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

121) How are equity theory and the psychological contract connected?

Answer: In both situations, employees compare a ratio of contribution to return. With equity theory, one employee compares his or her ratio with another employee's ratio. According to both theories, employees need to know that they are being treated fairly.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

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122) How does Maslow's hierarchy of needs model explain employee motivation?

Answer: Maslow identified five levels of human needs, arranged in a hierarchy of importance.

Lower-level needs must be met before a person will try to satisfy higher-level needs. Maslow's theory recognizes that because people have different needs, they are motivated by different factors. Maslow's hierarchy of needs explains the human needs that must be met for people to be motivated.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

123) According to the two-factor theory, how should managers enhance motivation?

Answer: According to this theory, managers should follow a two-step approach to enhance motivation. First, managers must ensure that hygiene factors are acceptable, reducing dissatisfaction. Then they must offer motivational factors as a means of improving satisfaction and motivation. The two-factor theory includes hygiene factors and motivation factors.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

124) Compare Theory X and Theory Y. Answer: Theory X carries the assumption that people are lazy, lack ambition, are self-centered, resist change, and are gullible. Theory Y carries the assumption that people are energetic, ambitious, selfless, intelligent, and want to contribute to company growth. Theory X and Theory Y are two competing informal theories of motivation.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

125) How does expectancy theory explain employee motivation?

Answer: Expectancy theory suggests that people are motivated to work toward rewards that they want and they believe they have a reasonable chance, or expectancy, of obtaining.

Expectancy theory states that a number of issues must be considered for individuals to exert high effort. The individual must expect that high effort will result in high individual performance and thereby organizational rewards. Finally, the individual must expect that the organizational reward will meet their personal goals. Expectancy theory explains the circumstances in which employees will work toward goals.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

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126) Describe typical characteristics of a person with a high need for achievement.

Answer: Individuals who have a high need for achievement tend to set moderately difficult goals and to make moderately risky decisions. High-need achievers also want immediate, specific feedback on their performance. They want to know how well they did something as quickly after finishing it as possible. Preoccupation with work is another characteristic of highneed achievers. They think about it on their way to the workplace, during lunch, and at home.

They find it difficult to put their work aside, and they become frustrated when they must stop working on a partly completed project. Finally, high-need achievers tend to assume personal responsibility for getting things done. They often volunteer for extra duties and find it difficult to delegate part of a job to someone else. Accordingly, they derive a feeling of accomplishment when they have done more work than their peers without the assistance of others.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.4: Identify and summarize the most important models and concepts of employee motivation.

127) According to which theory are employees given a voice in how they do their jobs and how the company is managed?

A) Participative management and empowerment B) Theory X C) Classical theory of motivation D) Modified work schedules E) Scientific management Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

128) What is flextime an example of?

A) Alternative workplace B) Job rotation C) Modified work scheduling D) Work sharing E) Modified workplace planning Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

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129) Which of the following can motivate workers by achieving a more satisfactory fit between workers and their jobs? A) Job redesign B) Team management C) MBO D) Training E) Job enrichment programs Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation. 130) Which is an example of a modified work schedule? A) Job sharing B) Job redesign C) Job rotation D) Job enrichment E) Job elimination Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation. 131) Which of the following allows people to choose their working hours by adjusting a standard work schedule on a daily or weekly basis? A) Job enrichment B) Flextime programs C) Job enlargement D) Job redesign E) Work sharing Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

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132) Which of the following is the most frequently used method of setting performance goals to motivate behavior?

A) Social learning B) Participative management C) Management by objectives D) Job enrichment E) Positive reinforcement Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

133) Which of the following is being practiced when employees can determine how to accomplish their jobs, and results in increased commitment to organizational goals?

A) Social learning B) Participative management C) Management by objectives D) Job enrichment E) Positive reinforcement Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

134) Which behavior modification choice links a negative action with a negative consequence?

A) Performance measurement B) Punishment C) Regression D) Social learning E) Management by objectives Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

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135) According to social learning theory, what determines the behavior of an individual at the workplace?

A) Cognitions and social environment B) Management by objectives C) Analysis D) Comparisons E) Reinforcement Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

136) Which of the following requires manager to define behaviors they want employees to exhibit, and specific behaviors they want to eliminate, before linking the behaviors to specific outcomes?

A) Behavior modification and reinforcement B) Management by objectives C) Expectancy theory D) Punishment E) Social learning Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

137) Which of the following occurs when a company or manager provides a reward to an employee after the employee exhibits desired behaviors?

A) Participative management B) Management by objectives C) Social learning D) Punishment E) Positive reinforcement Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

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138) Ricco notices that some coworkers exhibited certain behaviors that got them in trouble, while others exhibited certain behaviors that generated bonuses and promotions. Ricco decided he was going to change his behavior in order to get the bonuses and promotions. Which of the following is Ricco using to gain his desired outcomes?

A) Equity theory B) Expectancy theory C) Social learning D) Positive reinforcement E) Management by objectives Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

139) Matt met with his supervisor and together they determined the areas that Matt should focus on for the next six months. This included specific goals and specific steps to evaluate Matts' progress toward those goals. Which of the following did Matt and his supervisor use to direct Matt's behavior?

A) Punishment B) Two-factor theory C) Participative management D) Management by objectives E) Empowerment Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

140) Which of the following is required for participative management to impact the organization and prevent worker dissatisfaction?

A) All suggestions must be acted on B) Participation must have real value C) The invitation to participate is symbolic D) Teams are formed to implement ideas E) Jobs can be redesigned to support suggestions Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

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141) Which of the following is an advantage to using work teams in an organization?

A) Increased job satisfaction B) Increased effectiveness in traditionally structured organizations C) Less need for company-wide communication D) Less need for job redesign E) Ability to work on teams from remote locations Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

142) In which way can an organization increase job satisfaction?

A) Provide all employees with the same motivating factors B) Add one or more motivating factor to job activities C) Eliminate the use of teams at the workplace D) Use pay as the only source of motivation E) Allow employees to establish client relationships Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

143) Which of the following is the benefit of job enrichment programs?

A) Improved client relationships B) Less need for team work and work groups C) Increase job satisfaction D) Lower wages and benefit costs E) The redesign of jobs that leads to the elimination of jobs Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

44 .

144) Which of the following allows for workers to do a significant portion of their work away from the traditional office setting?

A) Natural work groups B) Job rotation C) Job sharing D) Telecommuting E) Flextime Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

145) The essence behind management by objectives (MBO) is that performance goals are used to direct and motivate behavior.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

146) Rewards can be used as a type of positive reinforcement.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

147) With job rotation, conventional office space is redesigned to accommodate jobs that are less dependent on assigned spaces.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

148) Participation and empowerment work more effectively in large firms than in small firms.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

45 .

149) Job rotation is a form of job enrichment.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

150) With job sharing, companies often experience increased turnover.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

151) MBO involves managers and subordinates in setting goals and evaluating progress.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

152) According to many experts, motivational impact is the biggest advantage of MBO. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

153) The use of teams can increase motivation and job satisfaction.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

46 .

154) According to social learning theory, people learn, in part, because others expect them to.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

155) In what three ways is job redesign typically implemented?

Answer: Job redesign is usually implemented through combining tasks, forming natural work groups, or through establishing client relationships. Job redesign is usually implemented through combining tasks, forming natural work groups, or through establishing client relationships.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

156) How can teams lead to higher levels of employee motivation and satisfaction in smaller firms?

Answer: They help employees make decisions more quickly and effectively. In addition, participation on teams enhances companywide communications and encourages organizational members to feel more like a part of the organization. Teams give employees opportunities to feel as if their level of contribution is meaningful.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

157) Under what conditions might the use of work teams be inappropriate?

Answer: Work teams may not be appropriate when workers perform repetitive, highly specialized tasks. Basing pay on team productivity can result in resentment, as faster workers feel that slower workers reduce the group's total output, and slower workers feel their coworkers are putting pressure on them to produce more. Teamwork is not always appropriate for every kind of work.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

47 .

158) Discuss management by objectives (MBO).

Answer: MBO is a system of collaborative goal setting that extends from the top of an organization to the bottom. MBO involves both managers and subordinates in setting goals and evaluating progress. MBO can serve as a program for improving satisfaction and motivation.

Management by objectives is the most frequently used method for setting performance goals, which are commonly used to direct and motivate behavior.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Concept LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

159) Discuss modified work schedules and how they increase job satisfaction.

Answer: Modified work schedules are different approaches to working hours. Modified work schedules can give employees more flexibility in balancing work with life. Work sharing programs and flextime programs, such as telecommuting, give employees more freedom in their professional and personal lives.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

160) Discuss the potential benefits to the employer from a flextime program.

Answer: Employers implementing flextime programs can expect a number of benefits. Studies have shown that the increased sense of freedom associated with flextime reduces stress and improves individual productivity. In urban areas, flextime programs can reduce traffic congestion and similar problems that contribute to stress and lost work time. Employers also benefit from higher levels of commitment and job satisfaction. Flextime programs can increase employee satisfaction and motivation by helping them to balance work and life.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

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161) Discuss ways in which managers can link the concept of punishment and rewards as a form of behavior modification.

Answer: Some managers try to influence workers' behavior through systematic rewards and punishments for specific behaviors. Such managers first try to define the specific behaviors that they want their employees to exhibit (working hard, being courteous to customers, stressing quality) and the specific behaviors they want to eliminate (wasting time, being rude to customers, ignoring quality). Then they try to shape employee behavior by linking positive reinforcement with desired behaviors and punishment with undesired behaviors.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

162) Describe how job enrichment programs increase job satisfaction.

Answer: Job enrichment is intended to add one or more motivating factors to job activities. For example, job rotation programs expand growth opportunities by rotating employees through various positions in the same firm. Workers gain not only new skills but also a broader overview of their work and their organization. Other programs focus on increasing responsibility or recognition.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 8.5: Describe some of the strategies and techniques used by organizations to improve employee motivation.

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Business Essentials, 13e (Ebert/Griffin) Chapter 9 Leadership and Decision Making 1) Which of the following do organizations need in order to be effective? A) More leadership than management B) More management than leadership C) Both leadership and management D) Either leadership or management E) Neither leadership nor management Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management. 2) Which of the following describes the concept of leadership? A) The processes and behaviors used by someone to determine the optimal decision among several options. B) The processes and behaviors used by someone to motivate, inspire, and influence the behaviors of others. C) The processes and behaviors used by someone to establish the organizational structure of a firm. D) The processes and behaviors used by someone to manage the functioning of an organization. E) The processes and behaviors used by someone to achieve tangible outcomes within an organization. Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.1: Define leadership and distinguish it from management. 3) Whereas managers focus on plans, results, and goals, what do leaders focus on? A) Productivity B) Profitability C) Inspiration D) Sales E) Organization Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

1 .

4) What type of power is granted through the established hierarchy within the organization?

A) Legitimate power B) Reward power C) Referent power D) Expert power E) Coercive power Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

5) Salary increases, bonuses, promotions, praise and job assignments are all examples of what type of power?

A) Legitimate power B) Reward power C) Referent power D) Expert power E) Coercive power Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

6) What type of power is more abstract, often based on loyalty or charisma?

A) Legitimate power B) Reward power C) Referent power D) Expert power E) Coercive power Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

2 .

7) When someone is able to act as both a leader and a manager, what type of power do they possess that others often do not?

A) Legitimate power B) Reward power C) Referent power D) Expert power E) Coercive power Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

8) Which of the following are considered to be those who are in the best position to affect the behaviors of others and motivate them to be more productive?

A) Managers B) Executives C) Customers D) Leaders E) Entrepreneurs Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

9) Which of the following is part of the role of a leader?

A) Organizing B) Planning C) Hiring D) Monitoring E) Controlling Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

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10) Which of the following is part of the role of a manager?

A) Aligning B) Inspiring C) Monitoring D) Agenda setting E) Planning Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

11) Which of the following is defined as the ability to affect the behavior of others?

A) Power B) Coerciveness C) Expertise D) Reference E) Rewards Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

12) Which of the following is another name for the legitimate power granted though the organizational hierarchy?

A) Reward B) Authority C) Identification D) Charisma E) Expertise Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

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13) Larry is an employee who likes to get his way at work, and will verbally abuse and threaten those who challenge him. Which type of power structure does Larry use to get his way with coworkers?

A) Legitimate B) Reward C) Coercive D) Referent E) Expert Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

14) Kim is considered to be a strong leader, and many of her employees mimic her behavior because they admire her. For example, they might work the same hours, and display enthusiasm and support for her ideas. Which type of power is Kim especially well developed in?

A) Expert B) Coercive C) Emotional D) Reward E) Referent Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

15) Estelle has a client that is often difficult and demanding. Yet, the client will not work with anyone but her because they feel Estelle listens and understands them, and is responsive to their needs. Which type of power does Estelle use when dealing with this client?

A) Referent B) Reward C) Expert D) Managerial E) Coercive Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.1: Define leadership and distinguish it from management.

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16) Management is defined as the processes and behaviors used to motivate, inspire, and influence the behaviors of others. Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.1: Define leadership and distinguish it from management. 17) All managers are leaders, but not all leaders are managers. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.1: Define leadership and distinguish it from management. 18) A person can be both a leader and a manager. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.1: Define leadership and distinguish it from management. 19) Leading and managing are discrete and separate activities. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.1: Define leadership and distinguish it from management. 20) Managers have very little legitimate power over their subordinates. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.1: Define leadership and distinguish it from management. 21) What is the difference between leadership and management within an organization? Answer: Leadership is necessary to create and direct change at an organization by influencing and motivating its members.

Management, on the other hand, is more concerned with everyday administrative activities in order to bring stability to and obtain reliable results from the organization. A person can be a manager, a leader, both, or neither. Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.1: Define leadership and distinguish it from management.

6 .

22) Identify the five types of leadership power and explain each.

Answer: Power is the ability to affect the behavior of others. Legitimate power is power granted through the organizational hierarchy; it is the power defined by the organization to be accorded to people occupying a particular position. Reward power is the power to give or withhold rewards. Rewards that a manager may control include salary increases, bonuses, promotion recommendations, praise, recognition, and interesting job assignments. Coercive power is the power to force compliance by means of psychological, emotional, or physical threat. Compared with legitimate, reward, and coercive power, which are relatively concrete and grounded in objective facets of organizational life, referent power is abstract. It is based on identification, imitation, loyalty, or charisma. Expert power is derived from information or expertise. The more important the information and the fewer the people who have access to it, the greater is the degree of expert power possessed by any one individual.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Application LO: 9.1: Define leadership and distinguish it from management.

23) What area was the earliest research on leadership MOST concerned with?

A) Leadership behaviors B) Leadership traits C) Leadership situations D) Leadership integrity E) Leadership roles Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.2: Summarize early approaches to the study of leadership.

24) Leadership researchers in the late 1940s believed that leaders should engage in which of the following behaviors?

A) Mostly employee-focused leader behavior B) Mostly task-focused leader behavior C) Both employee-focused leader behavior and task-focused leader behavior in equal amounts D) A mixture of employee-focused leader behavior and task-focused behavior depending on the task E) A mixture of employee-focused leader behavior and task-focused behavior depending on the employees Answer: C Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.2: Summarize early approaches to the study of leadership.

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25) What was a major problem with the trait approach to leadership?

A) The studies were too innovative and thus were not taken seriously at the time.

B) The studies were too inconsistent and thus not very practical.

C) The results were not very inspiring and thus ignored.

D) The results were found to be too pessimistic and thus were dismissed as useless.

E) The studies were too focused on certain leaders and thus were dismissed as irrelevant.

Answer: B Difficulty: Difficult AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

26) Which of the following BEST describes task-focused leader behavior?

A) Concentration on how tasks should be performed B) Concentration on which tasks should be performed C) Concentration on why tasks should be performed D) Concentration on who should perform which tasks E) Concentration on when tasks should be performed Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.2: Summarize early approaches to the study of leadership.

27) Which of the following BEST describes employee-focused leader behavior?

A) Concentration on both the work quality and work quantity of employees B) Concentration on both the well-being and work quality of employees C) Concentration on both the satisfaction and work quantity of employees D) Concentration on both the satisfaction and the well-being of employees E) Concentration on both the work quantity and the well-being of employees Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

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28) In interviews with two leadership applicants, a manager tried to determine each person's knowledge of the industry, level of energy, and level of self-esteem. With which of the following concepts of leadership is the manager MOST concerned here? A) Charismatic leadership B) Behavioral leadership C) Situational leadership D) Trait-based leadership E) Transformational leadership Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.2: Summarize early approaches to the study of leadership. 29) Which of the following statements BEST describes the assumptions made by researchers of the behavioral approach to leadership? A) Behaviors of effective leaders differ in various situations. B) Behaviors of effective leaders are the same in all situations.

C) Behaviors of effective leaders reflect the proper traits for effective leadership. D) Behaviors of effective leaders differ as reflected by different traits for effective leadership.

E) Behaviors of effective leaders reflect the proper disposition for effective leadership.

Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 9.2: Summarize early approaches to the study of leadership. 30) What type of leader behavior is focused on the motivation and well-being of those who work in the organization? A) Behavior B) Task C) Employee D) Situational E) Path-glory Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.2: Summarize early approaches to the study of leadership.

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31) Which of the following are characteristics identified in current approaches to employeefocused leader behavior?

A) Emotional and mental intelligence, drive, and integrity B) Long-term vision, profitability, and competitiveness C) Task, goals, and performance standards D) Performance standards, profitability, and competitiveness E) Drive, height, and mental capacity Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

32) Which of the following approaches to leadership focused on a list of potential leadership skills as a way to explain who would become a distinguished leader?

A) Situational B) Path-glory C) Trait D) Decision tree E) Behavioral Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.2: Summarize early approaches to the study of leadership.

33) Which behavioral approach to leadership considers each step that needs to be done to meet certain goals and achieve certain performance standards?

A) Trait-focused B) Universally-focused C) Task-focused D) Situation-focused E) Employee-focused Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.2: Summarize early approaches to the study of leadership.

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34) Miguel is a new manager, hired to replace a manager whose group had very low productivity and lacked motivation. Which of the following should Miguel emphasize with his workgroup to improve these issues?

A) Coercive power B) Task-focused behaviors C) Situational behaviors D) Expert power E) Loyalty Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.2: Summarize early approaches to the study of leadership.

35) The behavioral approach to the study of leadership identified two main areas of effective leadership behavior: trait-focused behavior and goal-focused behavior.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

36) The behavioral approach to leadership assumes that appropriate leader behavior varies from one situation to another.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

37) The behavioral approach to the study of leadership emphasized the actions taken by an effective leader rather than any specific traits.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

38) Leaders should try to use both task-focused and employee-focused leader behaviors to increase job satisfaction and performance.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

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39) Effective leaders use the same leadership traits in all situations.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

40) The behavioral approach to leadership focused on determining what behaviors are employed by leaders.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

41) Explain why the trait approach to leadership has experienced a resurgence in recent years.

Answer: Although the trait approach was all but abandoned several decades ago, in recent years, it has resurfaced. For example, some researchers have again started to focus on a limited set of traits. These traits include emotional intelligence, mental intelligence, drive, motivation, honesty and integrity, self-confidence, knowledge of the business, and charisma. The initial research findings from this work show promise but are far from being definitive.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.2: Summarize early approaches to the study of leadership.

42) What is the difference between employee-focused leadership and task-focused leadership?

Answer: Employee-focused leadership is when a leader focuses on the satisfaction, motivation, and well-being of his or her employees, and task-focused leadership is when a leader focuses on how tasks should be performed in order to meet certain goals and to achieve certain performance standards. These two basic forms of leader behavior were identified by researchers who assumed that the behaviors of effective leaders differed somehow from the behaviors of less effective leaders, and the behaviors of effective leaders would be the same across all situations.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.2: Summarize early approaches to the study of leadership.

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43) Which approach to leadership is based on the assumption that appropriate behavior varies from one experience to another?

A) Situational leadership B) Trait-based leadership C) Transformational leadership D) Transactional leadership E) Charismatic leadership Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership.

44) Which of the following models of leadership is based on the expectancy theory of motivation and suggests that the function of a leader is to make rewards available to the workplace?

A) Supportive B) Path-goal C) Decision tree D) Employee-focused E) Leader-member exchange Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.3: Discuss the concept of situational approaches to leadership.

45) Under the path-goal theory of leadership, what type of leader behavior includes setting challenging goals for the employee with the expectation that those goals will be achieved?

A) Directive B) Supportive C) Participative D) Achievement-oriented E) Decision tree Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership.

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46) Which approach to leadership focuses only on subordinate participation in decision making, yet does not address other aspects of leadership?

A) Decision tree B) Leader-member exchange C) Transformational D) Path-glory E) Directive leader Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership.

47) Which method of leadership encourages supervisors to establish a small number of trusted subordinates and give them special duties and privileges?

A) Transformational B) Charismatic C) Leader-member exchange D) Decision tree E) Path-glory Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership.

48) When a leader asks for employees' suggestions and input in the decision-making process, what type of leadership style is being utilized?

A) Directive B) Supportive C) Participative D) Achievement E) Transformational Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership.

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49) A leader who sets levels of expectation, then gives direction and guidance and determines work schedules uses what type of leadership theory? A) Transformational B) Directive C) Supportive D) Participative E) Achievement-oriented Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership. 50) Which approach to leadership attempted to identify various forms of leader behavior that result in contingent outcomes and consequences? A) Universal B) Situational C) Behavioral D) Task-focused E) Trait Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership. 51) When considering the situational approach to leadership, which of the following is a characteristic of subordinates? A) Value system B) Readiness to assume responsibility C) Personal inclinations D) Feelings of security E) Actual behaviors Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership.

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52) Which of the following can be assumed under the decision tree approach to leadership?

A) Leaders represent a vertical dyad of behaviors B) The same leader may display different leadership styles C) Most leaders prefer special duties requiring responsibility and autonomy D) Leaders will only pursue outcomes that are likely to be achieved E) Personal paths to success should be clearly identified Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.3: Discuss the concept of situational approaches to leadership.

53) The situational approach to leadership is concerned with the contingent outcomes and consequences of leader behavior rather than universal outcomes and consequences.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.3: Discuss the concept of situational approaches to leadership.

54) The situational approach to leadership gives equal weight to the elements of the situation and the characteristics of the leader and followers in order to ascertain the outcomes of a leader's actions.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 9.3: Discuss the concept of situational approaches to leadership.

55) Leadership characteristics include the manager's value system, confidence in subordinates, personal inclinations, feelings of security, and actual behaviors.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.3: Discuss the concept of situational approaches to leadership.

56) The leader-member exchange model stresses the importance of using different leadership styles for each situation.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.3: Discuss the concept of situational approaches to leadership.

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57) Describe the leader-member exchange model of leadership and how it differs from precious approaches to leadership.

Answer: The leader—member exchange (LMX) model stresses the importance of variable relationships between supervisors and each of their subordinates. Each superior—subordinate pair represents a "vertical dyad." The model differs from previous approaches in that it focuses on the differential relationship leaders often establish with different subordinates. This model suggests that supervisors establish a special relationship with a small number of trusted subordinates, referred to as "the in-group." The in-group usually receives special duties requiring responsibility and autonomy; they may also receive special privileges. Subordinates who are not a part of this group are called "the out-group," and they receive less of the supervisor's time and attention. However, the key element of this theory is the concept of individual vertical dyads and how leaders have different relationships with each of their subordinates.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.3: Discuss the concept of situational approaches to leadership.

58) Compare leadership characteristics to subordinate characteristics in the situational approach to leadership.

Answer: Leadership characteristics include the manager's value system, confidence in subordinates, personal inclinations, feelings of security, and actual behaviors. Subordinate characteristics include the subordinates' need for independence, readiness to assume responsibility, tolerance for ambiguity, interest in the problem, understanding of goals, knowledge, experience, and expectations. Situational characteristics that affect decision making include the type of organization, group effectiveness, the problem itself, and time pressures.

Three important situational approaches to leadership are (1) the path—goal theory, (2) the decision tree approach, and (3) the leader—member exchange model.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.3: Discuss the concept of situational approaches to leadership.

59) The situational approach to leadership was first proposed as a continuum of leadership behavior. Explain the two extreme ranges of the continuum.

Answer: At one extreme, the leader makes decisions alone; at the other end, employees make decisions with only minimal guidance from the leader. The situational approach to leadership assumes that appropriate leader behavior varies from one situation to another.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 9.3: Discuss the concept of situational approaches to leadership.

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60) Describe how the behavioral approach to leadership could apply to the situational approach to leadership.

Answer: The behavioral approach to leadership suggests that two forms of leadership prevail: task-focused leader behavior, in which a leader focuses on how tasks should be performed in order to meet certain goals, and employee-focused leader behavior, in which a leader focuses on the satisfaction, motivation, and well-being of his or her employees. The situational approach posits that the actions of a leader depend completely on the given circumstances of the organization to be led. Certain circumstances will necessitate certain behaviors from the leader, task-focused or employee-focused, depending upon where the need is greatest. Situational characteristics that affect decision making include the type of organization, group effectiveness, the problem itself, and time pressures.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 9.3: Discuss the concept of situational approaches to leadership.

61) Which of the following may describe charismatic leadership?

A) A form of interpersonal attraction based on the perspectives of the leader B) A form of interpersonal attraction that inspires support and acceptance C) A form of interpersonal guidance based on the perspectives of the managers D) A form of interpersonal guidance that uses highly controlled alternatives E) A form of interpersonal attraction which utilizes group performance norms Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.4: Describe transformational and charismatic perspectives on leadership.

62) Which of following describes the activities MOST involved with transactional leadership?

A) The implementation of a corporate vision B) The implementation of organizational transformations C) The implementation of regimented activities D) The implementation of employee incentives E) The implementation of situational problem solving Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.4: Describe transformational and charismatic perspectives on leadership.

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63) Which of the following is a fundamental element of charismatic leadership?

A) Planning B) Controlling C) Analyzing D) Influencing E) Organizing Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.4: Describe transformational and charismatic perspectives on leadership.

64) Which statement is true regarding charismatic leadership?

A) Charismatic leadership ideas are unpopular among contemporary managers.

B) Many studies have successfully assessed the impact of charismatic leadership.

C) Charismatic leadership is recognized as the most important approach to leadership.

D) Dependence on charismatic leadership can raise serious ethical concerns.

E) Taking over a leadership role from a charismatic leader is often easier than following a leader lacking in charisma.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership.

65) Which of the following describes one of the primary concerns associated with charismatic leadership due to severe devotion to a particular leader?

A) The potential lapse of ethical practices B) The potential inability to replace leadership efficiently C) The potential encouragement of micromanaging D) The potential stagnation of corporate vision E) The potential creation of bureaucracy Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership.

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66) Which of the following accurately describes a primary characteristic of charismatic leaders? A) They tend to set high expectations for themselves and control the expectations of others. B) They tend to set high expectations for themselves and establish high standards for others. C) They tend to establish high standards for themselves and rely on others to accomplish goals. D) They tend to energize others and establish good, stable practices. E) They tend to set high expectations for themselves and establish good, stable practices. Answer: B Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.4: Describe transformational and charismatic perspectives on leadership. 67) What type of leadership recognizes the need for change then creates and executes a plan for change? A) Transformational B) Transactional C) Charismatic D) Supportive E) Directive Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.4: Describe transformational and charismatic perspectives on leadership. 68) Which of the following focuses on the importance of leading for change? A) Transformational leadership B) Expert power C) Risk avoidance D) Coalition formation E) Transactional leadership Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.4: Describe transformational and charismatic perspectives on leadership.

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69) Charismatic leaders demonstrate personal excitement, confidence, and a consistent pattern of success as a way to A) envision the future.

B) energize others.

C) support others.

D) display empathy.

E) express confidence.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.4: Describe transformational and charismatic perspectives on leadership.

70) Which of the following do charismatic leaders do to enable others?

A) Set high expectations B) Envision future trends C) Express confidence D) Demonstrate personal excitement E) Consistently meet or exceed expectations Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.4: Describe transformational and charismatic perspectives on leadership.

71) Taking over a leadership role from a charismatic leader is less challenging than taking over from a leader lacking charisma.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.4: Describe transformational and charismatic perspectives on leadership.

72) Few studies have successfully assessed the meaning and impact of charismatic leadership.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership.

73) Charismatic leaders let subordinates determine expectations and performance levels.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership.

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74) Charismatic leadership can result in blind faith and unethical behaviors. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership. 75) Describe the three crucial elements of charismatic leadership. Answer: 1.) Charismatic leaders envision likely future trends and patterns, set high expectations for themselves and for others, and behave in ways that meet or exceed those expectations. 2.) Charismatic leaders energize others by demonstrating personal excitement, personal confidence, and consistent patterns of success. 3.) Charismatic leaders enable others by supporting them, empathizing with them, and expressing confidence in them. Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership. 76) Compare transformational leadership to transactional leadership. Answer: Transformational leadership focuses on the importance of leading for change (as opposed to leading during a period of stability). According to this view, much of what a leader does involves carrying out what might be thought of as basic management "transactions," such as assigning work, evaluating performance, and making decisions. Occasionally, however, the leader has to engage in transformational leadership to initiate and manage major change, such as managing a merger, creating a new work team, or redefining the organization's culture.

Thus, transformational leadership is the set of abilities that allows a leader to recognize the need for change, to create a vision to guide that change, and to execute the change effectively. Some experts believe that change is such a vital organizational function that even successful firms need to change regularly to avoid becoming complacent and stagnant. In contrast, transactional leadership is very similar to basic management in that it involves routine, regimented activities. Only a leader with real abilities to influence people can hope to perform both functions successfully. Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership.

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77) Describe a situation in which a leader would choose a more transactional approach to her leadership over a more transformational one.

Answer: A company that has successfully reorganized and reinvigorated itself after years of floundering would probably have more need for a leader who is primarily concerned with ensuring that the changes made for better performance remain in place and well-utilized, rather than a leader who will continue to transform the organization. Transformational leadership is the set of abilities that allows a leader to recognize the need for change, to create a vision to guide that change, and to execute the change effectively. In contrast, transactional leadership is essentially the same as management in that it involves routine, regimented activities.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership.

78) Identify three crucial elements of charismatic leadership.

Answer: Most experts today acknowledge three crucial elements of charismatic leadership.

Charismatic leaders envision likely future trends and patterns, set high expectations for themselves and for others, and behave in ways that meet or exceed those expectations.

Charismatic leaders energize others by demonstrating personal excitement, personal confidence, and consistent patterns of success.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.4: Describe transformational and charismatic perspectives on leadership.

79) Which of the following organizational aspects allows employees to perform capably without the direction of a leader?

A) Leadership neutralizers B) Leadership substitutes C) Leadership incentives D) Leadership guidelines E) Leadership obstructions Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

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80) Which of the following BEST describes the effects of leadership neutralizers in an organization?

A) They can make leader behavior ineffective.

B) They can make leaders more charismatic.

C) They can outweigh the need for leader behavior.

D) They can make managers become effective leaders.

E) They can make leaders more neutral toward employees.

Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

81) Which of the following may be an organizational factor that can serve as a substitute for leadership?

A) Individual professionalism B) Group divisiveness C) Explicit plans and goals D) A loose system of rules and procedures E) A performance-based reward system Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

82) When an employee can perform well without a leader, what is indicated?

A) Presence of a rigid reward system B) Presence of a leadership neutralizer C) Presence of a leadership substitute D) Presence of a leadership incentive E) Presence of a highly automated system Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

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83) Which type of factors result in a leadership behavior that has been effective in the past but is no longer working in a new situation?

A) Substitutes B) Neutralizers C) Charisma D) Transactional E) Cross-cultural patterns Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

84) Which of the following must occur when a leadership behavior has been neutralized?

A) Transformational leadership would have to be avoided B) The leader would have to take on the role of a coach C) Charismatic leadership would have to be used D) The leader would have to be replaced E) A new approach would have to be identified Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

85) In addition to elements of the job, which of the following will limit a leader's ability to make a difference, creating a leadership neutralizer?

A) Job structure B) Intrinsically satisfying work C) Embedded feedback D) Group factors E) Automation Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

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86) Which of the following can act as an alternative to traditional leadership?

A) Leadership substitutes B) Management C) Ethics D) Virtual leadership E) Nonprogrammed decisions Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

87) Which of the following will act as a neutralizer for individual factors of leadership substitutes?

A) Rigid rules and procedures B) Explicit plans and goals C) Indifference to rewards D) High levels of group cohesiveness E) Intrinsically satisfying work Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

88) Ariel is leading a team for a short-term project. She would like the team to manage itself on a daily basis, with input from her only when needed. Which of the following leadership substitutes should Ariel work to build in the group?

A) Rigid rules B) Interdependence C) Embedded feedback D) Experience and training E) Professionalism Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

89) Leadership neutralizers tend to strongly affect a leader's ability to affect a subordinate's performance.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

26 .

90) Rigid rules and procedures, along with individual professionalism, may render leader behavior unnecessary.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

91) High levels of experience and group cohesiveness among subordinates cannot neutralize leadership.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

92) Employees can perform their jobs even without the direction of a leader.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

93) Discuss neutralizers that would render leadership behavior ineffective when considering organization factors.

Answer: Organization factors that would render leadership behavior ineffective include explicit plans and goals, rigid rules and procedures, rigid reward systems not tied to performance, and physical distance between the supervisor and the subordinate.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

94) Identify individual factors that would act as leadership neutralizers.

Answer: Individual factors that would act as leadership neutralizers include individual professionalism, individual ability, knowledge, and motivation, individual training and experience, and indifference to rewards.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers.

27 .

95) How can norms and cohesiveness in a work group neutralize leadership? Answer: Norms and cohesiveness among group members can be so strong that there is nothing a leader can do to change things. These group factors are known as leadership neutralizers due to their tendency to render leader behaviors ineffective. Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 9.5: Identify and discuss leadership substitutes and neutralizers. 96) Contrast leadership substitutes with leadership neutralizers. Answer: Leadership substitutes are individual, task, and organizational characteristics that tend to outweigh the leader's ability to affect subordinates' satisfaction and performance. That is, they take the place of many needed aspects of effective leadership. Leadership neutralizers are individual, task, and organizational characteristics that render any attempted leadership behavior ineffective.

Group norms and cohesion are among some leadership neutralizers. In some cases, certain factors may actually substitute for leadership, making actual leadership unnecessary or irrelevant. In other cases, factors may exist that neutralize or negate the influence of a leader, even when that individual is attempting to exercise leadership.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 9.5: Identify and discuss leadership substitutes and neutralizers. 97) According to current theories of gender roles in leadership, which of the following BEST describes the differences in decision making? A) Males tend to be more democratic than females in making decisions. B) Males tend to be more critical than females in making decisions. C) Males tend to be more autocratic than females in making decisions. D) Males tend to be more rational than females in making decisions. E) Males tend to be more charismatic than females in making decisions. Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership. 98) Which states the correct definition of collectivism? A) A greater focus on group characteristics than on individual characteristics B) A greater focus on the group than on the individual C) A greater focus on the individual within a group than on the individual without a group D) A greater focus on individuals who are most successful E) A greater focus on groups that have been operative for the longest time Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

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99) Which states the correct definition of individualism?

A) A greater focus on individual characteristics than on cultural characteristics B) A greater focus on the individual than on the group C) A greater focus on the individual within a group than on the individual without a group D) A greater focus on individuals who have been present for the longest time E) A greater focus on individuals who are in leadership roles Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

100) Which of the following types of leaders has the primary role of helping a less experienced person learn how to function and to advance within an organization?

A) Enabler B) Mentor C) Manager D) Taskmaster E) Motivator Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

101) When a Japanese firm sends an executive to lead operations in the United States, which of the following will that executive need to acknowledge the importance of?

A) Group contributions B) Aggressiveness C) Loud, verbal exchanges D) Recognition E) Diversity of leadership Answer: D Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

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102) Which of the following best describes the new, modern role of a leader?

A) Overseer B) Individualist C) Collectivist D) Coach E) Autocratic Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

103) Which of the following identifies international differences and diversity issues within an organization?

A) Culture B) Individualism C) Collectivism D) Diversity E) Autocracy Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

104) Which of the following describes the work of the leader as a coach?

A) Train team members B) Control situations C) Direct work D) Monitor performance E) Oversee activities Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

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105) Gary and Mike cannot agree on the best way to resolve a customer issue, so they meet with Kim, their manager. Which of the following should Kim do, as she leads by coaching?

A) Provide general direction and mediate issues B) Act as a mentor C) Make the decision D) Change the workgroup E) Direct the work Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

106) A coaching role may include taking on responsibilities as a mentor.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

107) The ethical behaviors of top management are less of a concern today compared to the past.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

108) A manager working in the United States will typically see a high level of collectivism among workers.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

109) Most leadership theories and studies have focused on the roles of both men and women in leadership roles.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

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110) Male leaders tend to be no more task-focused than female leaders.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

111) Todays leaders act as overseers instead of coaches.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

112) Leaders who act as coaches generally maintain a low profile and let the group get its work done with little direct oversight.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

113) Discuss the importance of understanding the role of gender in leadership styles.

Answer: Given that most leadership theories and research studies traditionally focused on male leaders, developing a better understanding of how women might (or might not) lead differently is an obvious important next step. Some early observers, for instance, predicted that (consistent with prevailing stereotypes) female leaders would be relatively warm, supportive, and nurturing as compared to their male counterparts. But research suggests that female leaders are not necessarily more nurturing or supportive than male leaders. Likewise, male leaders are not systematically harsher, more controlling, or more task focused than female leaders. The one difference that has arisen in some cases is that women may be slightly more democratic in making decisions, whereas men have a tendency to be somewhat more autocratic. However, much more work needs to be done to better understand the dynamics of gender and leadership.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

114) From a coaching perspective, what roles might an organizational leader assume?

Answer: The leader may help select team members, provide some general direction, help train and develop the team, and help the team obtain necessary resources. Coaches from different teams may play important roles in linking the activities and functions of their respective teams.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership.

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115) How will leadership styles change in a collective culture when compared to an individualistic culture? Answer: Japan is generally characterized by collectivism (group before individual), whereas the United States is based more on individualism (individual before group). When a Japanese firm sends an executive to head up the firm's operation in the United States, that person will likely find it necessary to recognize the importance of individual contributions and rewards and the differences in individual and group roles that exist in Japanese and U.S. businesses. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.6: Discuss leaders as coaches and examine gender and cross-cultural issues in leadership. 116) Which part of the management of an organization would be MOST involved with strategic leadership? A) The top level of management B) The supervisory level of management C) The advisory level of management D) The auxiliary level of management E) All levels of management Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership. 117) Recent corporate scandals that have shaken the public's faith in business leadership have brought increased attention to what area of leadership? A) Virtual leadership B) Ethical leadership C) Strategic leadership D) Employee-focused leadership E) Charismatic leadership Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

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118) Which of the current business characteristics has brought the rise of virtual leadership? A) More communication within the organization B) Little communication among employees C) More face-to-face communication within the organization D) Less face-to-face communication within the organization E) Little communication between employees and management Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership. 119) In exercising strategic leadership, what is a leader MOST likely to do? A) Focus on company efficiency B) Focus on hiring the right people C) Align the company with its external and internal environments D) Avoid environmental impact on the firm E) Engage the firm with community organizations Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership. 120) In addition to understanding the organization's history and culture, what must a leader understand in order to be effective at strategic leadership? A) The external environment B) The needs of stakeholders C) The advantages to virtual leadership D) The hiring process E) How employees respond to various leadership styles Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

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121) Which of the following is considered to be one of the biggest challenges facing virtual leaders and their workers today?

A) Clear goals and measurements for projects B) Creating and maintaining relationships with employees C) Highly complex work environments D) Inconsistent "big pictures" for employees E) Organizational commitment Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

122) How can virtual leaders ensure effective communication with remote workers?

A) Develop a strong one-way process for communication.

B) Limit active listening.

C) Use multiple channels to communicate.

D) Minimize the use of structured work-related events.

E) Allow each remote employee to establish ground rules for getting work done.

Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

123) Which of the following is the goal of strategic leadership?

A) To provide the foundation of ethical leadership B) To encourage stronger relationships with remote workers C) To lead change so as to enhance competitiveness D) To develop skills that allows for effective international leadership E) To help managers assume the role of mentor and coach Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

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124) In order to be effective at strategic leadership, which of the following must be recognized by the leader?

A) The need for more cross-cultural leadership B) Factors that neutralize leadership effectiveness C) Traits of charismatic leadership D) Current strategic advantages and shortcomings E) Situational approaches to leadership that must be changed Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

125) Which of the following can serve to increase the commitment to high ethical standards for leadership?

A) Less pressure on risk avoidance tactics B) Increased reliance on programmed decision making C) Stronger grasp on the external environment that affects the organization D) Increased use of virtual leadership tools E) Stronger corporate governance models Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

126) Business leaders are promoted to senior position because they are ethical people.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

127) Strategic leaders work toward creating a more hierarchical structure.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

128) Strategic leadership is a leader's ability to understand the complexities of both the organization and its environment.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

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129) Virtual leadership refers to the role of leaders in a team environment.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

130) Virtual leaders don't need to concern themselves with creating and maintaining relationships with their employees.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

131) Strategic leaders need to have a complete understanding of the organization, including its history, culture, strengths and weaknesses.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

132) The goal of a strategic leader is to lead change.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

133) Today's increase pressure for ethical leadership means that leaders are now being held responsible for their actions.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

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134) Discuss ways a leader can improve communication when their work group is virtual.

Answer: Virtual leadership is emerging as an important issue for organizations. Leaders and their employees traditionally worked together in the same physical location and engaged in faceto-face interactions on a regular basis. But in today's world, both leaders and their employees may work in locations that are far from one another. Increasingly, communication between leaders and their subordinates happens largely by telephone, e-mail, social media, and online platforms like Zoom. One implication may be that leaders in these situations must work harder at creating and maintaining relationships with their employees that go beyond words on a digital screen. Although nonverbal communication, such as smiles and handshakes, may not be possible online, managers can instead make a point of adding a few personal words in an e-mail or text message (whenever appropriate) to convey appreciation, reinforcement, or constructive feedback.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

135) Why has virtual leadership become an important issue for organizations?

Answer: Many organizations are no longer completely based at one physical building. Face-toface interaction is becoming less common as e-mail and other mobile technologies become available. An effective leader thus must have the skills to organize, motivate, and influence members of her or his organization through a variety of media, i.e., possess good virtual leadership skills. Leaders in these situations must work hard at creating and maintaining relationships with their employees that go beyond words on a computer screen.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

136) Explain the concept and importance of ethical leadership.

Answer: In the wake of corporate scandals at firms such as Enron, Boeing, and AIG, faith in business leaders has been shaken. Perhaps now more than ever, high standards of ethical conduct are being held up as a prerequisite for effective leadership. More specifically, business leaders are being called on to maintain high ethical standards for their own conduct, to unfailingly exhibit ethical behavior, and to hold others in their organizations to the same standards. The behaviors of top leaders are being scrutinized more than ever, and those responsible for hiring new leaders for a business are looking more closely at the backgrounds of those being considered. Emerging pressures for stronger corporate governance models are likely to further increase the commitment to select only those individuals with high ethical standards for leadership positions in business and to hold them more accountable than in the past for both their actions and the consequences of those actions.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 9.7: Describe strategic leadership, ethical leadership, and virtual leadership.

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137) Which of the following is the name for choosing one alternative from among several options?

A) Decision making B) Assessment C) Evaluation D) Discernment E) Arbitration Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

138) What is the first step in rational decision making?

A) Understanding who will make the decision B) Recognizing that a decision is necessary C) Identifying alternatives to the problem D) Choosing an alternative E) Implementing the alternative Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

139) Which of the following describes a coalition?

A) An informal group formed to achieve a common goal B) An innate belief about how something should be accomplished C) A pro-business political party D) The network of management within a firm E) The network of employees within a firm Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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140) Which of the following reflects the extent to which a leader is willing to gamble when making a decision?

A) Escalation of commitment B) Overconfidence C) Caution D) Intuition E) Risk propensity Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

141) An inward belief about something, often without conscious consideration, is frequently referred to as what?

A) Intuition B) Risk taking C) Commitment D) Discernment E) Rationality Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

142) In selecting an alternative when making a decision, what should decision makers keep in mind?

A) Finding multiple acceptable alternatives is neither possible nor efficient.

B) Finding multiple acceptable alternatives should not take very long.

C) Selecting one alternative and rejecting all others will be the decision maker's main objective.

D) Selecting one alternative and rejecting all others might not be necessary.

E) Selecting one alternative and rejecting all others should be a straightforward process.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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143) Which of the following dispositions is typical for leaders with a high degree of risk propensity?

A) Reliance on intuition B) Reliance on rational decisions C) Aversion to use of intuition D) Aversion to rational decisions E) Reliance on ethical norms Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

144) What is a prime ingredient in fostering different levels of risk propensity within an organization?

A) Organizational culture B) Profitability level C) Gender differences D) Cross-cultural interactions E) Company size Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

145) Which of the following represents an informal alliance of individuals who seek to achieve a common goal?

A) Lobbying B) Escalation of commitment C) Political force D) Coalition E) Leadership Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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146) Which of the following occurs when a decision maker makes a decision and continues to support that decision, even when it appears to be wrong?

A) Escalation of commitment B) Legitimate power C) Risk propensity D) Path-glory E) Intuition Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

147) Which types of decisions are unstructured and require considerable time, energy, and resources to make?

A) Conditional B) Nonprogrammed C) Ethical D) Strategic E) Programmed Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

148) What type of decision-making process should be used for basic operating systems, procedures, and standard organizational transactions?

A) Conditional B) Strategic C) Programmed D) Ethical E) Nonprogrammed Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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149) When there is little ambiguity in the decision-making process, what decision-making condition exists?

A) A state of recognition B) A state of risk C) A state of rationality D) A state of certainty E) A state of uncertainty Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

150) When does a state of certainty exist in a decision-making process?

A) When conditions and alternatives are understood B) When conditions are complex and turbulent C) When potential payoffs and costs are determined D) When decisions are made based on intuition, judgment, and experience E) When the conditions are clearly defined and the need for a decision is clear Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

151) Which decision-making state occurs when each alternative and the associated costs and payoffs of those alternatives are associated with probability estimates?

A) A state of recognition B) A state of risk C) A state of rationality D) A state of certainty E) A state of uncertainty Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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152) When a manager must make a guess as to the probabilities associated with each alternative, what decision-making state is that manager working in?

A) Rationality B) Certainty C) Risk D) Recognition E) Uncertainty Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

153) Because of the complexity and dynamism of organizations, what decision-making state occurs when risks, alternatives, and consequences are unknown?

A) A state of recognition B) A state of risk C) A state of rationality D) A state of certainty E) A state of uncertainty Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

154) Frank is reviewing alternatives so a problem and trying to determine the best alternative for a given situation. Which of the following is Frank working on?

A) Strategic leadership B) Coaching and mentoring C) Risk avoidance D) Decision-making process E) Behavioral decision making Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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155) Which of the following is required from the decision maker in order to make the most effective decision?

A) Their propensity toward risk B) An understanding of the situation driving the decision C) Whether the decision is programmed or nonprogrammed D) Decision-making conditions E) Stakeholder perceptions of the potential decision Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

156) In which step of the decision-making process does a stimulus initiate the process?

A) Initiating alternatives B) Selecting the best alternative C) Recognizing and defining the decision situation D) Evaluating results E) Evaluating alternatives Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

157) Which of the following is the final step in the decision-making process?

A) Evaluating the effectiveness of the decision B) Gaining top leadership support C) Evaluating risk propensity D) Identifying political forces that contribute to the nature of decision making E) Forming a coalition to support the decision Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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158) The more important the decision, the more attention needs to be directed to developing alternatives.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

159) Managers with a high degree of risk propensity tend to rely heavily on intuition.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

160) When making a decision, finding multiple acceptable alternatives may be possible; however, selecting just one and rejecting all others is critical.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

161) An escalation of commitment indicates the increased support of all members and leadership in the action.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

162) Besides having more structure than a nonprogrammed decision, programmed decisions also recur more often.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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163) The complexity and turbulence of contemporary business make decision making under a state of certainty rare.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

164) The common goal of a coalition is often a preferred decision alternative.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

165) Discuss the role of risk propensity in decision making and the influence of organizational culture in shaping risk propensity.

Answer: The behavioral element of risk propensity is the extent to which a decision maker is willing to gamble when making a decision. Some managers are cautious about every decision they make. They try to adhere to the rational model and are extremely conservative in what they do. Such managers are more likely to avoid mistakes, and they infrequently make decisions that lead to big losses. Others are extremely aggressive in making decisions and willing to take risks.

They rely heavily on intuition, reach decisions quickly, and often risk big investments on their decisions. As in gambling, these managers are more likely than their conservative counterparts to achieve big successes with their decisions; they are also more likely to incur greater losses. The organization's culture is a prime ingredient in fostering different levels of risk propensity.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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166) Discuss how the identification of alternative to a decision changes based on the importance of the decision.

Answer: Once the decision situation has been recognized and defined, the second step is to identify alternative courses of effective action. Developing both obvious, standard alternatives and creative, innovative alternatives is useful. In general, the more important the decision, the more attention is directed to developing alternatives. Although managers should seek creative solutions, they must also recognize that various constraints often limit their alternatives.

Common constraints include legal restrictions, moral and ethical norms, and constraints imposed by the power and authority of the manager, available technology, economic considerations, and unofficial social norms.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

167) Describe the steps involved in the rational decision-making process.

Answer: The rational decision-making process is a series of rational steps used when making a decision. The first step is to recognize and define the decision situation. Next, the decision maker identifies alternative solutions to the defined problem. The decision maker will then evaluate alternatives. The decision maker then implements the chosen alternative. Following up and evaluating the results is the final step. If all decision situations were approached in this logical way, more decisions would prove successful. Yet decisions are often made with little consideration for logic and rationality.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

168) Discuss ways in which using a rational perspective to decision making will help when making nonprogrammed decisions.

Answer: There are three different conditions in which decisions must be made. These are conditions of certainty, risk, or uncertainty. The rational perspective prescribes a logical process for making decisions. It involves six steps: (1) recognizing and defining the decision situation, (2) identifying alternatives, (3) evaluating alternatives, (4) selecting the best alternative, (5) implementing the chosen alternative, and (6) following up and evaluating the results. The behavioral perspective acknowledges that things such as political forces, intuition, escalation of commitment, and risk propensity are also important aspects of decision making.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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169) Discuss why the majority of decisions made by managers are made under a state of uncertainty, and how managers can minimize the risk of poor decisions.

Answer: Most of the major decision making in contemporary organizations is done under a state of uncertainty. The decision maker does not know all the alternatives, the risks associated with each, or the likely consequences of each alternative. This uncertainty stems from the complexity and dynamism of contemporary organizations and their environments. The emergence of the Internet as a significant force in today's competitive environment has served to increase both revenue potential and uncertainty for most managers. To make effective decisions in these circumstances, managers must acquire as much relevant information as possible and approach the situation from a logical and rational perspective. Intuition, judgment, and experience always play major roles in the decision-making process under conditions of uncertainty.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 9.8: Relate leadership to decision making and discuss both rational and behavioral perspectives on decision making.

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Business Essentials, 13e (Ebert/Griffin) Chapter 10 Human Resource Management and Labor Relations 1) Which of the following is considered the starting point in attracting qualified new employees? A) Job analysis B) Recruitment C) Planning D) Training E) Compensation Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs. 2) Which of the following describes the purpose of a skills inventory? A) To plan, and identify people for transfer or promotion B) To list key managerial positions C) To describe the specifications for a job D) To assess trends in previous human resource usage E) To hire people from outside the organization Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs. 3) Which of the following outlines the duties of a job, its working conditions, and the tools, materials, and equipment used to perform it? A) Replacement chart B) Job specification C) Job description D) Job analysis E) Skills inventory Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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4) Which of the following describes the skills, abilities, and qualifications required for a job?

A) Staffing survey B) Advertising write up C) Job specification D) Employee analysis E) Replacement chart Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

5) Which of the following collects information on each employee's education, skills, work experiences, and career aspirations?

A) Managerial grid B) Employee information system C) Job analysis D) Job specification E) Labor forecast Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

6) Which of the following reflects an organization's investment in attracting and motivating an effective workforce?

A) Human capital B) Talent management C) HR planning D) Internal forecasting E) Job descriptions Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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7) Where can a manager find information on the skills, abilities and other qualifications needed to perform a job successfully? A) Talent management files B) Job specification C) Human capital systems D) Job analysis E) Job description Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs. 8) What is the systematic study of jobs within an organization? A) Talent management B) Job specification C) Human capital systems D) Job analysis E) Job description Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs. 9) Which of the following indicates an understanding of the skills employees hold and how to best use those skills for the success of the organization? A) Job analysis B) Talent management C) Skills inventory D) Adverse impact E) Human capital Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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10) Jill, the head of Human Resources, is working with the Vice President of Operations to determine which employees have the right skills to move into more senior level positions within three to five years. Which of the following is Jill likely using to plan for specific people and positions?

A) External supplies B) Replacement charts C) Job descriptions D) Realistic job previews E) Application forms Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

11) Rolland has an open position in his department and he needs to fill it quickly. Where could Rolland go to find an employee with the right skills who is also familiar with the organization and its values?

A) State employment commissions B) Colleges C) Employee information system D) Competitors E) Online job boards Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

12) Which of the following is an advantage of using replacement charts to identify potential successors?

A) Online job boards can be added to widen the applicant pool B) There is time to plan with jobs to eliminate in the event of an economic downturn C) Salary ranges and benefits can be considered in staffing plans D) There is time to plan developmental experiences for people identified as potential successors E) Job descriptions can be changed to better match the skill set of incoming candidates for open positions Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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13) Which of the following best describes a firm's human resources?

A) The total wages and benefits paid to each employee B) The ability to hire the right person at the right time for the right position C) A firm's commitment to its people D) The ability to identify who will move into leadership positions E) All people who comprise the organizations workforce Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

14) Which of the following is a systematic approach to developing a job description and job specification?

A) Conducting a job analysis B) Forecasting demand for labor C) Forecasting the internal supply of labor D) Determining the external supply of labor E) Developing a plan that matches demand with supply Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

15) Job analysis is the systematic study of jobs within an organization resulting in a job description.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

16) Human capital represents the set of organizational activities directed at attracting, developing, and maintaining an effective workforce.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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17) Replacement charts can be used to forecast the external supply of candidates for senior managerial positions in the organization.

Answer: FALSE Difficulty: Difficult AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

18) Talent management reflects the organization's investment in attracting and motivating an effective workforce.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

19) The effective use of Human Resources can positively affect the profitability of an organization.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

20) The first step in determining the need for labor is to match the HR supply to internal demand.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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21) Discuss methods of responding to a shortfall of labor or overstaffing.

Answer: After comparing future demand and internal supply, managers can make plans to manage predicted shortfalls or overstaffing. If a shortfall is predicted, new employees can be hired, current employees can be retrained and transferred into understaffed areas, individuals approaching retirement can be enticed to stay on, or labor-saving or productivity-enhancing systems can be installed. If overstaffing is expected to be a problem, the main options are transferring the extra employees, not replacing individuals who quit, encouraging early retirement, and laying off workers.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

22) Describe the purpose of replacement charts at higher levels of an organization.

Answer: At higher levels of an organization, managers plan for specific people and positions.

The technique most commonly used is the replacement chart, which lists each important managerial position, who occupies it, how long that person will probably stay in it before moving on (either to another position or to retirement), and who is now qualified or soon will be qualified to move into it. This technique allows ample time to plan developmental experiences for people identified as potential successors for critical managerial jobs. When a manager's performance is reviewed each year, notations are placed in the system about the person's readiness for promotion, potential positions for promotion, and what development activities are needed to prepare the individual for promotion. Other managers throughout the firm can access the system whenever they have positions available.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

23) Discuss ways in which HR functions impact the bottom line of the organization.

Answer: Most managers understand that the effectiveness of their HR function has a substantial impact on the bottom-line performance of their firm. Poor HR planning can result in spurts of inefficient hiring followed by costly layoffs, which are expensive in terms of unemployment compensation payments, training, public relations, and employee morale. Haphazard compensation systems do not attract, keep, and motivate good employees, and outmoded recruitment practices can expose the firm to expensive and embarrassing discrimination lawsuits.

Consequently, the chief HR executive of most large businesses is a vice president directly accountable to the CEO, and many firms develop sophisticated strategic HR plans and integrate those plans with other strategic planning activities.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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24) How do human resource managers use job analysis for human resource planning?

Answer: The basis for human resource planning is job analysis. Job analysis is the evaluation of the duties required by a particular job and the qualities required to perform it. HR planning involves job analysis and forecasting the supply and demand for labor.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

25) Discuss the strategic importance of human resources within an organization.

Answer: Human resources are critical for effective organizational functioning. The importance of HRM (or "personnel," as it is sometimes called) has grown dramatically in the last two decades. Its new importance stems from increased legal complexities, the recognition that HR are a valuable means for improving productivity, and the awareness of the costs associated with poor HRM. The effectiveness of their HR function has a substantial impact on the bottom-line performance of the firm. Poor HR planning can result in spurts of hiring followed by layoffs, which are costly in terms of unemployment compensation payments, training expenses, and morale. Consequently, the chief HR executive of most large businesses is a vice-president directly accountable to the CEO, and many firms are developing strategic HR plans and integrating those plans with other strategic planning activities.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

26) Identify the difference between a job description and a job specification and explain how they each support the job analysis process.

Answer: Job analysis is a systematic analysis of jobs within an organization. Most firms have trained experts who handle these analyses. The job description lists the duties and responsibilities of a job; its working conditions; and the tools, materials, equipment, and information used to perform it. The job specification lists the skills, abilities, and other credentials and qualifications needed to perform the job effectively.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.1: Define human resource management, discuss its strategic significance, and explain how managers plan for their organization's human resource needs.

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27) Which legal concept holds that both employer and employee have the mutual right to terminate an employment relationship any time, for any reason, and without advance notice to the other?

A) Quid pro quo B) Affirmative action C) Employment at will D) Mutual consent E) Equal employment opportunity Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

28) Which of the following constitutes an illegal hiring practice under Title VII of the Civil Rights Act of 1964?

A) Asking someone about their availability because the position requires a 50-hour work week B) Establishing a diversity committee to help minority employees connect with each other C) Asking a candidate whether or not he attends church, because it is important that candidates are available to work on Saturdays and Sundays D) Keeping track of how many males and females are in the organization E) Requiring an applicant to specify gender on an application Answer: C Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

29) Which key piece of legislation made it illegal to discriminate in all areas of the employment relationship, including hiring, promotion, and compensation?

A) Executive Order 11246 B) Civil Rights Act of 1991 C) Equal Pay Act of 1963 D) Title VII of the Civil Rights Act of 1964 E) Fair Labor Standards Act Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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30) Which of the following pieces of legislation made it easier to sue an employer for discrimination, but limited how much could be awarded in damages? A) Equal Employment Opportunity Act of 1972 B) Civil Rights Act of 1991 C) Equal Pay Act of 1963 D) Title VII of the Civil Rights Act of 1964 E) Fair Labor Standards Act Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 31) Which Act established the minimum wage and mandated overtime payable to employees who work more than 40 hours per week? A) ERISA B) Wagner Act C) Fair Labor Standards Act D) Taft-Hartley Act E) Civil Rights Act of 1964 Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 32) Who is charged with enforcing the provisions outlined in Title VII of the Civil Rights Act of 1964?

A) Supreme Court B) ERISA C) OSHA D) EEOC E) NLRB Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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33) Which type of plan allows employers to intentionally seek out employees from underrepresented groups within the organization? A) Civil Rights B) Adverse impact C) Employment at will D) Patriot Act E) Affirmative action Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 34) Which Act increased management rights when a union is attempting to organize a group within an organization? A) Taft-Hartley B) OSHA C) Wagner Act D) NLRA E) ERISA Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 35) How does the EEOC define sexual harassment in the workplace? A) A single off-color joke that makes a worker uncomfortable B) Any unwelcomed sexual advances C) Persistent sexual advances D) Unwelcome sexual advances made only by members of the opposite sex E) Behavior that is sexual in nature only when it is instigated by a supervisor Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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36) What legal defense can an employer use when charged with using a pre-employment test that creates adverse impact? A) Evidence that the test identifies those who are better able to do the job than others B) Evidence that the employer sought out minorities C) Evidence that the employer treated all employees the same D) Evidence that the test included goals for underused groups E) Evidence that the test identified how hiring goals will be met Answer: A Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 37) Which of the following is used to identify employment goals for underused groups, and how those goals will be achieved? A) Civil rights B) Affirmative action plans C) Equal employment D) Adverse impact E) Supply and demand Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 38) When must an employer have a written affirmative action plan that details how underused groups will be pursued? A) When the employer applies for a loan B) When the employer wants to issue stock C) When the employer holds government contracts D) When the employer expands operations internationally E) When the employer is privately held Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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39) Who is defined as an older worker under the Age Discrimination in Employment Act? A) Those over 30 years of age B) Those over 40 years of age C) Those over 50 years of age D) Those over 60 years of age E) Those over 70 years of age Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 40) The Age Discrimination in Employment Act requires passive nondiscrimination. How do employers practice passive nondiscrimination? A) By seeking employees who are protected by the Act B) By seeking minorities who are protected by the Act C) By providing special treatment to women and minorities D) By treating all who apply fairly E) By increasing salaries for workers covered by the Act Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues. 41) Which of the following Acts helps to ensure the financial security of pension funds by regulating how they can be invested? A) Employee Retirement Income Security Act B) Wagner Act C) Age Discrimination in Employment Act D) Equal Pay Act E) Fair Labor Standards Act Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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42) What is the purpose of the Family and Medical Leave Act of 1993?

A) To extend the length of maternity leaves B) To allow employees to take a leave of absence with pay C) To allow employees to take a leave of absence for family or medical emergencies D) To increase the percentage of payroll spent on health care for workers E) To ensure financial security for all employees, regardless of circumstance Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

43) Which of the following set up procedures for employees to vote on their desire for union representation?

A) Taft-Hartley Act B) Labor-Management Relations Act C) Occupational Safety and Health Act D) Wagner Act E) Patriot Act Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

44) Which Act established the National Labor Relations Board?

A) Taft-Hartley Act B) Patriot Act C) Labor-Management Relations Act D) Occupational Safety and Health Act E) Wagner Act Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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45) Which of the following restricted the ability of some individuals and those from other countries to work with potentially dangerous biological agents?

A) Civil Rights Act of 1991 B) National Labor Relations Act C) Occupational Safety and Health Act D) Employment at Will E) Patriot Act Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

46) Which of the following is the offer to exchange something of value, such as a promotion or pay raise, in exchange for sexual favors?

A) Fair labor standards B) Labor-management relations C) Employment at will D) Quid pro quo E) Hostile work environment Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

47) Which of the following set the minimum wage and requires the payment of overtime for work in excess of 40 hours per week for some workers?

A) Quid pro quo B) Affirmative action C) Fair Labor Standards Act D) Equal Pay Act of 1963 E) Title VII of the Civil Rights Act Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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48) Employers may require an AIDS test as a condition of an offer of employment.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

49) The Occupational Safety and Health Act of 1970 directly mandates the provision of safe working conditions.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

50) In spite of employment at will, employees may not be fired for filing workers' compensation claims.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

51) It is illegal to use any pre-employment test that creates adverse impact.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

52) ERISA was designed to regulate how pension funds are invested.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

16 .

53) The Family and Medical Leave Act of 1993 requires employers to provide up to 12 weeks of paid leave for family and medical emergencies or when a child is born.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

54) The National Labor Relations Board was established by the Wagner Act to enforce the provisions of the Act. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

55) The Patriot Act gives Human Resource Managers access to previously confidential personal information on employees, such as health and financial records.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

56) The Americans with Disabilities Acts forbids discrimination on the basis of disability and requires reasonable accommodations for disabled employees.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

57) Affirmative Action legally mandated nondiscrimination in employment on the basis of race, creed, sex, or national origin.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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58) Discuss the provisions of the Equal Pay Act of 1963.

Answer: The Equal Pay Act of 1963 requires that men and women be paid the same amount for doing the same job. Attempts to circumvent the law by having different job titles and pay rates for men and women who perform the same work are also illegal. Basing an employee's pay on seniority or performance is legal, however, even if it means that a man and woman are paid different amounts for doing the same job.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

59) Discuss the key provisions of the Occupational Safety and Health Act and how it is enforced in the workplace.

Answer: The Occupational Safety and Health Act (OSHA) of 1970 directly mandates the provision of safe working conditions. It requires that employers (1) provide a place of employment that is free from hazards that may cause death or serious physical harm and (2) obey the safety and health standards established by the Department of Labor. Safety standards are intended to prevent accidents, whereas occupational health standards are concerned with preventing occupational disease. The standards are enforced by OSHA inspections, which are conducted when an employee files a complaint about unsafe conditions or when a serious workrelated accident occurs. Spot inspections of plants in especially hazardous industries such as mining and chemicals are also made. Employers who fail to meet OSHA standards may be fined.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

60) Explain the role of equal employment opportunity and the Equal Employment Opportunity Commission.

Answer: The basic goal of equal employment opportunity regulation is to protect people from unfair or inappropriate discrimination in the workplace. Problems arise when distinctions among people are not job related. Courts have determined that illegal discriminatory actions by an organization or its managers cause members of a protected class to be unfairly differentiated from other members of the organization. Discrimination is illegal when based on race, color, religion, gender, age, national origin, disability status, and status as a military veteran. The Equal Employment Opportunity Commission (EEOC) is a division of the Department of Justice. The EEOC was created by Title VII of the 1964 Civil Rights Act and has specific responsibility for enforcing Title VII, the Equal Pay Act, and the Americans with Disabilities Act. Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

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61) What are the two types of sexual harassment as defined by the courts?

Answer: In cases of quid pro quo harassment, the harasser offers to exchange something of value for sexual favors. In hostile work environment harassment, the workplace is tainted by offcolor jokes, lewd comments, or other actions that make employees uncomfortable. Companies must deal with sexual harassment by warning, reprimanding, or firing the harasser.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

62) Describe the purpose of the Wagner Act, including how the Act is enforced.

Answer: Union activities and management's behavior toward unions constitute another heavily regulated area. The National Labor Relations Act (also known as the Wagner Act), passed in 1935, sets up a procedure for employees to vote on whether to have a union. If they vote for a union, management is required to bargain collectively with the union. The National Labor Relations Board (NLRB) was established by the Wagner Act to enforce its provisions.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

63) Discuss the implications of the Patriot Act for Human Resource Management.

Answer: In response to the terrorist attacks of September 11, 2001, the U.S. government passed legislation that increases its powers to investigate and prosecute suspected terrorists. This legislation, known as the Patriot Act, has several key implications for HRM. For instance, certain restricted individuals (including ex-convicts and aliens from countries deemed by the State Department to have repeatedly provided support for acts of international terrorism) are ineligible to work with potentially dangerous biological agents. More controversial are sections granting government investigators access to previously confidential personal and financial records.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 10.2: Discuss the legal context of human resource management and identify contemporary legal issues.

19 .

64) Which selection technique is MOST likely to introduce bias in the selection of employees?

A) Interview B) Application forms C) Aptitude tests D) Drug testing E) Polygraph tests Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

65) Which of the following is the process of attracting qualified persons to apply for available jobs?

A) Realistic job previews B) Recruiting C) Selection D) Hiring E) Interviews Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

66) What is the advantage of promoting from within when filling an opening within the organization?

A) Less need for a realistic job preview B) Increased influx of high-quality employees C) Increased employee morale D) Increased turnover E) Increased diversity of employees Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

20 .

67) How can a firm help to ensure a new hire has a thorough understanding of a position before accepting the position?

A) Only consider internal candidates.

B) Have the HR department review the job description with the new hire.

C) Institute a higher than standard compensation plan.

D) Use realistic job previews.

E) Use a different application form for each type of position available.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

68) Which of the following is a popular selection device, even though it is a poor predictor of job success?

A) Drug test B) Reference check C) Credit check D) Physical exam E) Interview Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

69) Which of the following is the process of considering current employees as candidates for job openings?

A) Internal recruiting B) Performance appraisal C) Development D) External recruiting E) Training Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

21 .

70) Which of the following is an advantage to using a realistic job preview when hiring new employees?

A) There will be less need for job shadowing B) The employee is more likely to remain in the job C) Training time is significantly reduced D) Pay and benefits will be less E) The external recruiting process will be less time consuming Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

71) Which of the following is considered to be one of the best predictors of job success?

A) Application forms B) Reference checks C) Tests of knowledge, skill, and aptitude D) Realistic job previews E) Interviews Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

72) Companies often use internal recruitment to build morale and keep high-quality employees from leaving.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

73) When selecting someone to hire, the first step in selection is usually asking the candidate to take a test.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

22 .

74) Internal recruiting methods include recommendations, and the use of a digital skills inventory system.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

75) Recruiting is not just about hiring the right person for the position; it is about a prospective employee being attracted to a position and company.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

76) The most effective pre-employment test is the interview.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

77) The goal of the selection process is to predict job success of candidates.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

23 .

78) Discuss ways in which an organization can improve the validity of the interview as a pre- employment test. Answer: Interviews are a popular selection device, although they are actually often a poor predictor of job success. For example, biases inherent in the way people perceive and judge others when they first meet affect subsequent evaluations.

Interview validity can be improved by training interviewers to be aware of potential biases and by tightening the structure of the interview. In a structured interview, questions are written in advance, and all interviewers follow the same question list with each candidate.

Structured interviews tend to be used for jobs that are relatively routine, such as some administrative assistant positions, data entry jobs, and college admissions processing positions. For interviewing managerial or professional candidates, a somewhat less structured approach can be used. Although question areas and information- gathering objectives are still planned in advance, specific questions vary with the candidates' backgrounds. Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees. 79) Discuss the cost of hiring the wrong employee for the position. Answer: Hiring the wrong employee can cost the company about half of a low-skilled worker's annual wages or three to five times upper-level employees' annual wages. Therefore, hiring the "wrong" employee for $50,000 per year could cost the company at least $25,000. These costs stem from training, counseling, low productivity, termination, and recruiting and hiring a replacement. Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees. 80) Distinguish between internal and external recruiting. Answer: Internal recruiting means considering present employees as candidates for openings. External recruiting involves attracting people outside of the organization to apply for jobs. The goal of each process is to attract the most qualified persons to apply for available jobs.

Difficulty: Easy AACSB: Application of knowledge Question Category: Analytical LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees.

24 .

81) Describe how wages, salaries, incentives, and benefits programs help companies attract and keep skilled workers. Answer: A major factor in retaining skilled workers is a compensation system, the total package that a firm offers employees in return for their labor. Wages are paid for time worked and a salary is paid for discharging the responsibilities of a job. Incentive programs are designed to motivate performance and include bonuses, merit salary systems, pay for performance, profit- sharing, gainsharing, and pay-for-knowledge plans. Benefit programs include workers' compensation insurance, retirement plans, and cafeteria benefit plans. Finding the right combination of compensation elements is always complicated by the need to make employees feel valued, while holding down company costs. Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.3: Identify the steps in staffing a company and discuss ways in which organizations recruit and select new employees. 82) Which of the following links salary increases to performance levels in nonsales jobs? A) Bonuses B) Collective bargaining C) Merit salary systems D) Cafeteria benefit plans E) Workers' compensation insurance Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.4: Describe the main components of a compensation and benefits system. 83) When a paycheck is calculated from the number of hours worked during the week, what type of system is being used to pay employees? A) Gainsharing B) Salary C) Profit sharing D) Wage E) Incentive Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

25 .

84) Which refers to compensation other than wages and salaries and other incentive pay offered by a firm to its workers?

A) Profit-sharing B) Gainsharing C) Benefits D) Pay-for-knowledge E) Variable Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.4: Describe the main components of a compensation and benefits system.

85) What is the total package that a firm offers employees in return for their labor?

A) Wage B) Salary C) Benefits D) Compensation E) Retention plan Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.4: Describe the main components of a compensation and benefits system.

86) What do top executives often receive as incentives, in theory because they are responsible for the value of the incentive?

A) Merit salary systems B) Workers' compensation insurance C) Salaries D) Stock options E) Wages Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

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87) What type of pay system rewards middle managers for especially productive output?

A) Variable pay B) Merit raises C) Profit-sharing D) Gainsharing E) Pay-for-knowledge Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.4: Describe the main components of a compensation and benefits system.

88) If a firm ends its fiscal year with profit, which plan can the firm use to distribute part of the excess to employees?

A) Gainsharing plan B) Profit-sharing plan C) Cafeteria plan D) Insurance plan E) Salary-sharing plan Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

89) Which of the following companywide incentive plans distribute bonuses to employees when a company's costs are reduced through greater work efficiency?

A) Wage setting plans B) Pay-for-performance plans C) Profit-sharing plans D) Gainsharing plans E) Pay-for-knowledge plans Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

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90) Some employers provide employees with a fixed dollar amount for benefits, allowing employees to choose between various benefits, such as health insurance, additional vacation days, educational reimbursement, and life insurance. What is the name of this plan? A) Gainsharing B) Profit-sharing C) Cafeteria benefits D) Equal employment E) Retention benefits Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 10.4: Describe the main components of a compensation and benefits system. 91) Where is the starting place most employers consider when setting wage and salary benefits? A) Competitors B) Internal pay structure C) Government mandates D) Demands in the marketplace E) Job boards such as LinkedIn and Career Builders Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system. 92) When an employee is at a point where additional money no longer acts as a motivator, which of the following should a firm consider? A) Additional benefits B) Incentive programs C) Extended paid time off work D) Retirement plans E) Training and development Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

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93) Which of the following can be used to encourage and pay workers to learn new skills that allow them to become proficient at different jobs?

A) Gainsharing plans B) Pay for performance plans C) Pay-for-knowledge plans D) Worker compensation E) Bonuses Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

94) Which of the following is a legally required benefit designed to protect workers who are injured on the job?

A) Retirement plans B) Gainsharing C) Family Medical Leave Act (FMLA) D) Stock options E) Worker's compensation insurance Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

95) Wages refer to compensation usually expressed as an amount paid per year.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.4: Describe the main components of a compensation and benefits system.

96) The number of variable pay programs in the United States has been consistently falling for the last decade, and it is predicted that they will continue to decline in popularity.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

97) Many firms say that merit raises are a better motivator than variable pay.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.4: Describe the main components of a compensation and benefits system.

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98) In a company-sponsored pension plan, employees are not allowed or required to make contributions.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

99) In recent years, some companies have run into problems because they have not set aside enough money to cover the retirement funds they have agreed to provide.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

100) In setting wage and salary levels, a firm may start by looking at competitors' levels.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

101) A major factor in retaining talented employees is a company's compensation system.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

102) Workers Compensation Insurance can replace more traditional insurance plans offered by the organization.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

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103) Describe the purpose of a defined contribution plan.

Answer: Company-sponsored retirement plans were historically set up to pay pensions to workers when they retire (these are referred to as defined benefit plans). Many companies today are transitioning to what are called defined contributions plans, also known as 401(k) plans.

Under these plans, contributions from the employee, sometimes matched by the employer, are invested in stock and/or bond funds. The individual's retirement account is subject to greater risk (as well as potentially greater returns) while the employer incurs less risk.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

104) Discuss the issues and option employers face as they try to contain the cost of benefits.

Answer: As the range of benefits has increased, so has concern about containing the costs of these benefits. Many companies are experimenting with cost-cutting plans while still attracting and retaining valuable employees. One approach is the cafeteria benefits plan. A certain dollar amount of benefits per employee is set aside so that each employee can choose from a variety of alternatives. Cafeteria benefits plan sets limits on benefits per employee, each of whom may choose from a variety of alternative benefits. Another area of increasing concern is health care costs. Medical expenses have increased insurance premiums, which, in turn, have increased the cost to employers of maintaining benefits plans. Many employers are looking for new ways to cut those costs. One increasingly popular approach is for organizations to create their own networks of health care providers. These providers agree to charge lower fees for services rendered to employees of member organizations. In return, they enjoy established relationships with large employers and, thus, more clients and patients. Insurers also charge less to cover the employees of network members because they make lower reimbursement payments.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.4: Describe the main components of a compensation and benefits system.

105) Explain commonly offered benefits and identify at least two benefits that are mandated by the Federal government.

Answer: Benefits and compensation other than wages and salaries and other incentives offered by a firm to its workers, account for an increasing percentage of most compensation budgets.

Most companies are required by law to pay tax for Social Security retirement benefits and provide workers' compensation insurance. Most businesses also provide health, life, and disability insurance for their workers, as well as paid time off for vacations and holidays. Many also allow employees to use payroll deductions to buy stock at discounted prices. Counseling services for employees with alcohol, drug, or emotional problems are also becoming more common, as are on-site child-care centers.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.4: Describe the main components of a compensation and benefits system.

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106) Which of the following types of training occurs while the employee is at his or her place of work? A) On-the-job training B) Vestibule training C) Off-site training D) Incentive training E) Remote training Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal. 107) A departmental manager is meeting with each of his subordinates to discuss how well each employee has done their job over the past year. What process is he involved in? A) Job description B) Labor negotiations C) Vestibule assessment D) Performance appraisal E) Salary increase distribution Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal. 108) Which of the following indicates that the assessment of an employee is based on what they have accomplished lately instead of since the last evaluation period? A) Halo error B) Recency error C) 360 degree feedback D) Judgmental methods E) Fixed standards Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

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109) A restaurant is undergoing a change in cuisine and style of service. It is important that new staff is hired and existing staff retrained. Why might the HR manager recommend vestibule training as being highly effective in this situation?

A) Prospective and present employees can focus on learning and feedback instead of productivity.

B) Off-site training has great value for evaluating the effectiveness of performance appraisals.

C) Employees will be reluctant to undertake training removed from the workplace.

D) The owners can be more confident that the change to the restaurant will be popular with customers.

E) Employees will see limited connections to everyday work in this type of training.

Answer: A Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

110) Which of the following will help a manager learn the skills needed to be more successful both now and at some point in the future?

A) Training B) Development C) Cafeteria-style plans D) Pay-for-knowledge plans E) Vestibule training Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

111) How can an organization determine if training has been successful?

A) Have employees fill out a survey on how well they liked the training.

B) Track how much time employees spent at the training program.

C) Monitor the waiting list for the training program.

D) Test job performance both before and after training has been complete.

E) Measure job performance before training has been completed.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

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112) Which of the following represents a formal process used to aid in decision making about training, raises, and promotions?

A) Development B) Evaluation of training C) Vestibule training D) On-the-job training E) Performance appraisals Answer: E Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

113) When conducting a performance appraisal that uses output as a basis for appraisal, what type of method is being used?

A) Objective B) Judgmental C) Ranking D) Comparison E) Rating Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

114) What is the advantage of using a rating method rather than a ranking method during the performance review process?

A) Each employee is compared to all other employees in the group.

B) Each employee is compared to a fixed standard.

C) The recency error is eliminated.

D) Managers do not need to utilize a 360-degree review.

E) Providing employees with meaningful feedback is easier.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

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115) What type of rating system incorporates feedback from customers, subordinates and peers, among others?

A) Ranking B) Recency C) 360-degree feedback D) Judgmental E) Rating Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

116) One new approach to the appraisal system is the scheduling of conversations, or "checkins". Which of the following is the goal of using this approach instead of a more formal appraisal process?

A) The recency effect is eliminated B) Employers can evaluate performance based on personal bias and add that to the ranking system C) Employees receive feedback on what they are doing well and where they need to improve D) Judgement methods of review become more accurate and meaningful E) Increases and incentives are closely aligned with each check-in meeting Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

117) Which of the following is a type of error that occurs in the performance appraisal system when a manager only considers the performance of the employee that has occurred in the past few weeks or month instead of their total performance?

A) Recency B) Halo C) Intentional D) Judgmental E) Objective Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

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118) Which of the following is the first step in developing a training plan?

A) Devise a mix of training content that is easy to upgrade and update B) Determine evaluation tools for ensure training success C) Decide if training should be on the job or off site D) Review the performance of attendees E) Determine what needs exist Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

119) Performance appraisals are designed to show workers how well they are doing their jobs.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

120) The best method of evaluating the success of training is to ask how the employees liked the training and which aspects they feel will be most relevant to their job.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

121) Web-based training allows for a mix of content that is relatively easy to update and revise.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

122) Self-contained training facilities used by some larger corporations are referred to as corporate universities.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

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123) The best way to evaluate the effectiveness of training is to survey attendees on how much they enjoyed the training and what they learned from it.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

124) Discuss ways to evaluate the success of a training program.

Answer: The effectiveness of training and development programs should always be evaluated.

Typical evaluation approaches include measuring one or more relevant criteria (such as attitudes or performance) before and after the training, and determining whether the criteria changed as a result of the training and development. Evaluation measures collected at the end of training are easy to get, but actual performance measures collected when the trainee is on the job are more important. Trainees may say that they enjoyed the training and learned a lot, but the true test is whether their job performance improves after their training.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

125) Discuss the advantages and disadvantages of using web-based training methods.

Answer: Web-based and other digital media-based training are especially popular today. Such methods allow a mix of training content, are relatively easy to update and revise, let participants use a variable schedule, and lower travel costs. However, they are limited in their capacity to simulate real activities and facilitate face-to-face interaction. In addition, most training programs rely on a mix of methods.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal.

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126) Describe the process for providing feedback on performance during the performance appraisal review. Answer: The last step in most performance appraisal systems is giving feedback to subordinates about their performances. This is usually done in a private meeting between the person being evaluated and his or her boss. The discussion should generally be focused on the facts: the assessed level of performance, how and why that assessment was made, and how it can be improved in the future. Feedback interviews are not easy to conduct, however. Many managers are uncomfortable with providing candid feedback, especially if the feedback is negative and subordinates are disappointed by what they hear. Properly training managers, however, can help them conduct more effective feedback interviews. Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal. 127) How do organizations develop workers' skills? Answer: The firm must acquaint new employees with the firm and their jobs. Managers train employees and develop job skills. On-the-job training occurs while the employee is at work. Off- the-job training takes place away from work. Difficulty: Moderate AACSB: Application of knowledge Question Category: Analytical LO: 10.5: Describe how managers develop the workforce in their organization through training and performance appraisal. 128) Workers such as computer scientists, engineers, and software developers who typically require extensive and highly specialized training, are known as what? A) Technical workers B) Knowledge workers C) Contingent workers D) Labor relation workers E) Union workers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

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129) Which term refers to employees hired to supplement a firm's permanent workforce?

A) Union workers B) Contingent workers C) Knowledge workers D) Flextime workers E) Remote workers Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

130) What is the advantage for a firm who works to hire from a diverse workforce?

A) Limited social awareness among employees B) Increased ability to institute cafeteria-style benefits C) A higher quality labor force D) More flexibility in schedules E) Increased employee retention Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

131) In addition to increased flexibility, why do organizations use contingent workers?

A) There is less need for training.

B) Contingent workers can replace knowledge workers.

C) Contingent workers often represent a higher quality labor force.

D) Contingent workers cost less.

E) The organization simply cannot find full time workers.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

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132) Which of the following represents the range of workers' attitudes, values, beliefs and behaviors?

A) Knowledge workers B) Worker characteristics C) Contingency workers D) Workplace diversity E) Unionization Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

133) Which sector of the U.S. workforce will represent nearly one quarter of the workforce by 2050, according to the U.S. Department of Labor?

A) Those over the age of 40 B) Caucasians C) Hispanics D) Asians E) Blacks Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

134) Which of the following is the likely outcome when a firm fails to update the skills of knowledge workers?

A) Lower wages and benefits B) Loss of competitive advantage C) Increased workforce diversity D) Increased reliance on contingency workers E) Increased likelihood of unionization Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

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135) In which way can a firm bring a wider array of information to bear on problems, and increase insights on marketing products to a wider range of consumers?

A) Increase workforce diversity B) Increase training funds C) Eliminate the use of contingency workers D) Apply vestibule training methods E) Formalize the 360-degree review process Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

136) The range of workers' attitudes, values, beliefs, and behaviors that differ based on age, gender, or ethnicity all represent workforce diversity.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

137) The increased demand for knowledge workers will require firms to use extra measures, such as higher salaries and signing bonuses, to attract qualified employees.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

138) Workplace diversity can create competitive advantage for firms.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

139) Knowledge workers can often be replaced with contingency workers.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

41 .

140) It is critical to offer highly specialized training to knowledge workers to prevent their skills from becoming obsolete. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace. 141) Discuss ways to effectively manage contingent and temporary workers. Answer: One key to managing contingent workers effectively is careful planning and analysis. Rather than having to call in workers sporadically, and with no prior notice, organizations try to bring in specified numbers of workers for well-defined periods of time. A second key is recognizing what can and cannot be achieved by using contingent and temporary workers. For instance, these workers may lack the firm-specific knowledge to perform as effectively as a permanent employee would perform. They are also less committed to the organization and less likely to engage in organizational citizenship behaviors. Finally, managers must make decisions about how to integrate contingent workers into the organization. These decisions may be as simple as whether to invite contingent workers to the holiday party, or they may be more complicated, such as whether to grant contingent workers access to such employee benefits as counseling services and child care. Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace. 142) Explain the meaning of workforce diversity.

Answer: Workforce diversity is the range of workers' attitudes, values, beliefs, and behaviors that differ by gender, race, age, ethnicity, physical ability, and other relevant characteristics. As a result of affirmative action efforts, many U.S. organizations are now committed to creating more diverse workforces. Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

42 .

143) How can diversity create competitive advantage?

Answer: Workforce diversity is the range of workers' attitudes, values, beliefs, and behaviors that differ by gender, race, and ethnicity. By hiring the best people from every group rather than hiring from just one or a few groups, a firm can develop a higher-quality labor force. A diverse workforce can bring a wider array of information to bear on problems and can provide insights on marketing products to a wider range of consumers.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.6: Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.

144) When does the collective bargaining process begin?

A) When the contract is ratified by the members B) When the bargaining zone is identified C) When the union is recognized as the official bargaining agent for members D) When union and management representatives agree to contract terms E) When the employer establishes a maximum limit for pay and benefits Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

145) What is the name given to a group of individuals working together to achieve shared jobrelated goals such as higher pay, shorter working hours, greater benefits, or better working conditions?

A) Management organization B) Company hierarchy C) Labor union D) External organization E) Permanent employees Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

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146) Which term refers to a labor action in which employees temporarily walk off the job and refuse to work?

A) Strike B) Lockout C) Boycott D) Mediation E) Bargaining Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

147) Who are temporary or permanent replacements for striking workers?

A) Strikebreakers B) Union busters C) Union breakers D) Contingent workers E) Labor relation teams Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

148) What is the process of working with employees who are represented by a union?

A) Labor relations B) Human resource management C) Negotiation D) Arbitration E) Contingency recruitment Answer: A Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

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149) Which is the process by which union leaders and managers negotiate common terms and conditions of employment for the workers represented by unions?

A) Striking B) Picketing C) Labor relations D) Collective bargaining E) Compensation planning Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

150) Which of the following occurs when union members agree to avoid buying the products of a targeted employer?

A) Lockout B) Boycott C) Mediation D) Arbitration E) Slowdown Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

151) If negotiations fail, what can a company choose to use to prevent union employees from coming to work?

A) Wildcat strike B) Lockout C) Arbitration D) Economic strike E) Mediation Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

45 .

152) What occurs when a neutral third party dictates a settlement between two sides that have agreed to submit to outside judgment?

A) Mediation B) Arbitration C) Strikebreaker D) Impasse E) Picketing Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

153) In a union contract, future wage increases are often tied to the Consumer Price Index and provide for A) economic strikes.

B) contract renegotiations.

C) wage reopener clauses.

D) pay tied to productivity.

E) cost of living adjustments.

Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

154) What tactic could a unionized employee take to show why they are striking against an employer?

A) Picketing B) Boycotting C) Work slowdowns D) Mediation E) Lockouts Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

46 .

155) Which alternative to striking encourages workers to work at a pace that results in significantly lower productivity for the organization?

A) Work slowdown B) Lock out C) Sickout D) Picket E) Boycott Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

156) Which of the following is an bargaining issue typically most important to union negotiators?

A) Job security B) Management rights C) Hiring policies D) Work assignments E) Insurance co-pays Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

157) Which of the following is the term that describes when management and labor cannot agree on a new contract after several bargaining sessions?

A) Impasse B) Picketing C) Arbitration D) Lockouts E) Work slowdown Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

47 .

158) Which of the following is used to suggest a settlement on the other parties, even though both parties know the suggestion cannot be imposed?

A) Mediation B) Impasse C) Arbitration D) Lockout E) Boycott Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

159) Labor relations refers to dealing with employees who are not represented by a union.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

160) A solution to a long-term contract based solely on COLA is called a wage reopener clause that does not allow wage rates to be renegotiated.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

161) Although millions of American workers still belong to unions, union membership as a percentage of the total workforce has steadily declined.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

162) Wage reopener clauses are required by law.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

48 .

163) A work slowdown is an alternative to striking where large numbers of workers perform at a much slower pace than normal.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

164) A cost of living adjustment is a clause in the labor contract that ties future earnings to changes in consumer purchasing power.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

165) Most union negotiators include compensation, benefits, and job security as the issues typically most important.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

166) Describe the difference between mediation and arbitration.

Answer: Rather than wield these often-unpleasant weapons against one another, labor and management can agree to call in a third party to help resolve the dispute. In mediation, the neutral third party (the mediator) can suggest, but cannot impose, a settlement on the other parties. In arbitration, the neutral third party (the arbitrator) dictates a settlement between the two sides, which have agreed to submit to outside judgment. In some disputes, such as those between the government and public employees, arbitration is compulsory, or required by law.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

49 .

167) Describe the current trends in labor-management relations in the United States.

Answer: Since the mid-1960s, U.S. labor unions have experienced increasing difficulties in attracting new members. Today, about 11 percent of all U.S. workers belong to a labor union.

Union membership took a jump in 2009, in part due to worker concerns about job security during the 2008-2009 recession, but then resumed its downward trend. Another issue affecting trends in unionism is the geographic shift in the U.S. economy. For the most part, unionism in the United States started in the northern and Midwestern regions and in cities like Detroit, Pittsburgh, Cleveland, St. Louis, and Chicago. But over the past several decades there has been a pronounced shift as businesses have moved their operations to the south and southwest, areas that do not have a strong union heritage.

Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

168) What options are available to the union when contract negotiations break down?

Answer: When contract negotiations break down, unions may strike (refuse to work), picket (publicize grievances at the entrance to the employer's facility), boycott (refuse to buy the products of the employer), or slowdown (perform jobs at a slower pace). These actions taken by the labor union are tactics used to support their cause.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

169) What options are available to management when contract negotiations break down?

Answer: When contract negotiations break down, management may institute a lockout (workers are denied access to the workplace) or use strikebreakers (hire nonunion workers as temporary replacements for striking employees). Managers and workers both have a range of tactics that they can use to advance their cause.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

50 .

170) Why is it important for the union to include a cost-of-living adjustment clause when negotiating a union contract?

Answer: Compensation includes both current and future wages. One common tool for securing wage increases is a cost-of-living adjustment (COLA). Most COLA clauses tie future raises to the Consumer Price Index (CPI), a government statistic that reflects changes in consumer purchasing power. Almost half of all labor contracts today include COLA clauses.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 10.7: Explain why workers organize into labor unions and describe the collective bargaining process.

51 .

Business Essentials, 13e (Ebert/Griffin) Chapter 11 Marketing Processes and Consumer Behavior 1) What is the term for the process of creating, communicating, and delivering value to customers while managing customer relationships in ways that benefit the organization and its stakeholders?

A) Financial planning B) Controlling C) Operations management D) Marketing E) Demographic profiling Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

2) Which of the following occurs between similar products and is based on buyers' perceptions of the benefits of products offered by particular companies?

A) International competition B) Substitute competition C) Brand competition D) Benefit competition E) Placement competition Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

3) Which of the following represents the functions of a product and the emotional satisfaction gained by owning it?

A) Features B) Requirements C) Benefits D) Safety devices E) Guarantees Answer: C Difficulty: Easy AACSB: Application of knowledge Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

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4) Which type of goods includes raw materials used to produce other products?

A) Substitute products B) Industrial goods C) Consumer goods D) Marketing goods E) Disposable goods Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

5) Which of the following are products with intangible features such as professional advice?

A) Personal goods B) Services C) Industrial goods D) Psychographics E) Reseller goods Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

6) Which type of marketing is used to build long-term relationships with customers?

A) Industrial marketing B) Relationship marketing C) Social marketing D) Economic marketing E) Consumer marketing Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

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7) What is data warehousing? A) A marketing strategy that creates sales agreements that stipulate product delivery B) The process of dividing a market into categories of customer types C) The study of consumer needs and wants and the way in which sellers can best meet them D) The process of collecting, storing, and retrieving data in electronic files E) A customer identification strategy that targets potential buyers Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment. 8) Companies who use ad campaigns to raise public awareness of important issues such as texting while driving are working with what type of environment? A) Political-legal B) Sociocultural C) Technological D) Competitive E) Demographic Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment. 9) Marketing managers often support the activities of political action committees (PACs).

In doing this, which environment are they attempting to influence? A) Competitive B) Economic C) Technological D) Political-legal E) Geo-demographic Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

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10) A company decides to introduce a line of crackers made with organically grown grains and vegetables. What environmental trend is the company responding to?

A) Competitive B) Sociocultural C) Political-legal D) Economic E) Technological Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

11) What do organizations use to build better, stronger information connections with clients?

A) Customer relationship management (CRM) B) Data warehousing C) Industrial marketing D) Possession utility E) Data mining Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

12) Which of the following is used to automate the analysis of customer information and how might they be influenced by marketers?

A) Data mining B) Brand competition C) Customer relationship management D) Relationship marketing E) Data warehousing Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

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13) What type of utility is practiced by those companies who allow marketers to have a voice in product design and identifying features customers want?

A) Time B) Possession C) Form D) Value E) Place Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

14) What is created when the ownership of a product, including the setting of selling prices, terms of credit, and ownership documentation is transferred to a customer?

A) Place utility B) Time utility C) Value utility D) Possession utility E) Form utility Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

15) When a domestic marketer competes against foreign firms to sell products of a similar nature, what type of sales competition is created?

A) Brand B) Substitute C) International D) Competitive E) Social Answer: C Difficulty: Easy AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

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16) Which of the following represent those products that may not look like another, but can still fulfill the same need?

A) Consumer-focused B) Value C) Substitute D) Place utility E) Form utility Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

17) Which of the following represent the major force that drive marketing?

A) Innovation B) Price C) Value D) Wants and needs E) Cost versus benefits Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

18) Each fall, the local department store displays a large collection of hats, gloves, and scarves right next to the door. Often, when shoppers enter the store from the cold parking lot, they stop to look at the display. Which of the following is the department store developing?

A) Possession utility B) Industrial goods C) Customer-relationship management D) Data mining E) Place utility Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

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19) Which of the following can be described as all of the ways a firm can create value for their constituents?

A) The technological environment B) Brand competition C) Entrepreneurship D) Possession utility E) The competitive environment Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

20) Marketers must recognize factors outside an organization's boundaries that might affect their marketing program. This is referred to as A) brand competition.

B) the external environment.

C) data mining.

D) the competitive environment.

E) international competition.

Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

21) Which of the following are the tangible products bought strictly for personal use?

A) Consumer goods B) Services C) Relationship goods D) Data E) Industrial goods Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

7 .

22) Marketing consists primarily of advertising a product or service.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

23) Benefits add value by providing features that increase the customer's satisfaction.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

24) The formula for value is benefits divided by costs.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

25) Marketing concepts can be extended to the promotion of ideas.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

26) Time utility is created by a sales agreement that stipulates where products will be delivered to customers.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

8 .

27) The economic environment includes all relevant conditions within the competitive system in which the business competes.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

28) Services, such as vacations, accountants, and insurance, often use the same marketing techniques as goods.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

29) Discuss the ways in which marketing applies to customers, businesses, and services.

Answer: Marketing actually applies to two types of customers: those who buy consumer goods and those who buy industrial goods. These products are all consumer goods, tangible goods that you, the consumer, may buy for personal use. Firms that sell goods to consumers for personal consumption are engaged in consumer marketing, also known as business-to-consumer (B2C) marketing. Marketing also applies to industrial goods, physical items used by companies to produce other products. Marketing techniques are also applied to services, products with intangible (nonphysical) features, such as professional advice, timely information for decisions, or vacation packaging. Service marketing, the application of marketing for services, continues to be a major growth area in the United States. Finally, marketers also promote ideas, such as "inspirational values."

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

9 .

30) Discuss what marketers must do to increase value for customers and satisfy customers.

Answer: The marketing strategies of leading firms focus on increasing value for customers.

Marketing resources are deployed to add benefits and/or decrease costs of products to provide greater value. To satisfy customers, a company may do the following: 1.) Develop an entirely new product that performs better (provides greater performance benefits) than existing products.

2.) Keep a retail store open longer hours during a busy season (adding the benefit of greater shopping convenience). 3.) Offer price reductions (the benefit of lower costs). 4.) Offer information that explains how a product can be used in new ways (the benefit of new uses at no added cost).

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

31) Explain the elements that comprise the marketing environment.

Answer: The marketing environment is comprised of everything outside of an organization's boundaries that might affect it including the political-legal, sociocultural, technological, economic, and competitive environments. Rules, regulations, and legislation make up the political-legal environment. Most industries are affected in some way by political-legal elements.

The sociocultural environment includes changes in social values, consumer preferences, language, demographics, etc. The technological environment has had a profound impact on the marketing environment with the invention of new technologies that completely change our lifestyles. The economic environment includes such factors as inflation, interest rates, and recession; because they determine spending patterns by consumers, businesses, and governments, economic factors influence marketing plans for product offerings, pricing, and promotional strategies. The competitive environment encompasses all organizations that supply or provide similar products. All players in the competitive environment compete for consumers' purchasing power.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

10 .

32) Describe the three types of competition faced by marketers.

Answer: The three types of competition faced by marketers include substitute products, brand competition, and international competition. Substitute products may not look alike, or they may seem very different from one another, but they can fulfill the same need. Brand competition occurs between similar products, such as the auditing services provided by the large accounting firms of Ernst & Young and KPMG. Brand competition is based on buyers' perceptions of the benefits of products offered by particular companies. International competition matches the products of domestic marketers against those of foreign competitors. After identifying which type of competition is present, the marketer can then develop a strategy for attracting more customers.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.1: Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

33) What is the term for a detailed strategy for focusing marketing efforts on consumers' needs and wants?

A) Marketing mix B) Marketing manager C) Product differentiation D) Product development E) Marketing plan Answer: E Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

34) What part of the marketing mix includes communicating information about products and is the most visible component of the marketing mix?

A) Product B) Promotion C) Price D) Place E) Psychographics Answer: B Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

11 .

35) Which of the following is used to guide the detailed activities of the marketing plan by identifying what marketing will accomplish in the future?

A) Marketing strategy B) Product differentiation C) Marketing objectives D) Distribution policy E) Marketing mix Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

36) Which specific issues do marketing strategies help marketers determine?

A) The goals the marketing plan intends to accomplish B) The marketing objectives of what the marketer will accomplish C) The mix of goods or services to fill a customer's needs or wants D) The marketing activities a business will use to achieve marketing goals E) The features that will differentiate a product from competitors Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

37) Why should a marketing strategy utilize the marketing mix, which includes product, price, place, and promotion?

A) To control the organization's resources to support marketing activities B) To transfer goods or services to customers C) To develop a clear strategy for planning and implementing marketing activities D) To plan the organization's marketing toward supporting the organization's overall mission E) To attract and satisfy customers in target markets Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

12 .

38) Which of the following represents a feature or image that makes one product different from its competitors?

A) Marketing strategy B) Product differentiation C) Place distribution D) Personal selling E) Product positioning Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

39) Which of the following can be the overall effect when a good or service is priced higher than competitors?

A) There will be an implication of higher quality standards.

B) There will be greater demand for the product.

C) Sales will start slow, but increase over time.

D) There will be a larger market size, but smaller profit.

E) There will be a smaller market and smaller profit.

Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

40) How do organizations determine how to move products to customers?

A) Promotion B) Marketing mix C) Place (or distribution) D) Marketing managers E) Personal selling feedback Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

13 .

41) Which of the following do companies offer as one-time direct inducements to buyers in order to tempt buyers into buy goods or services?

A) Personal selling B) Sales promotions C) Public relations campaigns D) Integrated marketing E) Advertising Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

42) What is the term for the communication efforts that are designed to build goodwill and build favorable attitudes in consumers?

A) Sales promotion B) Advertising C) Promotion D) Public relations E) Personal selling Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

43) When selling industrial goods and services, using representatives who are trained to understand the needs of each customer is a key component of A) advertising.

B) personal selling.

C) sales promotions.

D) publicity.

E) interactive marketing.

Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

14 .

44) Which section of the marketing plan will be used to set the stage for everything that follows?

A) Mission B) Objectives C) Sales forecasts D) Strategy E) Product Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

45) The combination of product, price, promotion, and place strategies work together to create A) product differentiation.

B) the marketing mix.

C) the integrated marketing strategy.

D) market segmentation.

E) target markets.

Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

46) In which way to organizations find a profitable middle ground between high and low profits?

A) Distribution plans B) Marketing research C) Pricing strategies D) Market segmentation E) Product differentiation Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

15 .

47) Jose sponsored a table at a regional cycling race, and paid to have is product logo printed on the back of all the t-shirts provided to those who entered the race. Which of the following did Jose participate in during the race?

A) Personal selling B) Public relations C) Distribution D) Advertising E) Product differentiation Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

48) In order to distribute products, firms must make decisions about how they will distribute products. The distribution methods used by firms is referred to as A) promotions.

B) integrated marketing.

C) inventory control.

D) warehousing.

E) channels.

Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

49) What can be utilized to ensure a company's marketing and nonmarketing efforts are compatible?

A) Market segmentation B) Integrated marketing strategies C) Target marketing D) Public relations E) Personal selling Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

50) Product differentiation is selecting the best price at which to sell a product.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

16 .

51) The goals of the marketing plan are the foundations for the marketing objectives.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

52) The product mix includes consideration of product, pricing, place, and promotion.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

53) A feature or image that makes a product different from existing products is called product differentiation.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

54) Advertising is a one-time inducement, such as a coupon or free gift, to encourage consumers to buy a product.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

55) An integrated marketing strategy ensures the four Ps work tighter and with the company's nonmarketing activities.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

56) Marketing managers are those responsible for the planning, organizing, leading, and controlling an organization's marketing resources.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

17 .

57) Describe the distribution decisions firms must consider when getting products to customers.

Answer: In the marketing mix, place (or distribution) refers to where and how customers get access to the products they buy. When products are created, they must then be made available to customers at some location (place) such as a retail store, on a digital device, or by direct delivery to the customer. Distribution is the set of activities that moves products from producers to customers. Placing a product in the proper outlet, like a retail store, requires decisions about several activities, all of which are concerned with getting the product from the producer to the consumer. Decisions about warehousing and inventory control are distribution decisions, as are decisions about transportation options. Firms must also make decisions about the channels through which they distribute products. Many manufacturers, for example, sell goods to other companies that, in turn, distribute them to retailers. Others sell directly to major retailers, such as Target and Kroger. Still others sell directly to final consumers.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

58) Why are marketing plans future oriented?

Answer: First and foremost, marketing plans are future oriented, showing what will be happening with marketing's upcoming activities. Every well-developed marketing plan begins with objectives or goals that set the stage for everything that follows. Marketing objectives, the goals the marketing plan intends to accomplish, are the foundation that guides all the detailed activities in the plan. The marketing objectives themselves, however, exist solely to support the company's overall business mission and typically focus on maintaining or enhancing the organization's future competitive position in its chosen markets.

Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

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59) Describe the elements of the marketing mix. What is their collective role? Answer: The elements of the marketing mix include product, price, promotion, and place. Product includes goods, services, or ideas designed to fill a consumer need or want. Meeting consumer needs often means changing existing products to keep pace with emerging markets and competition; many marketers focus on differentiating their product(s) from those of competitors. Pricing a product involves the selection of the best price at which to sell the product. Prices must support a variety of costs within the organization. Further, both low and high price strategies can be effective in different situations. Place or distribution refers to the proper placement of products in the market. Place decisions including transportation warehousing, and inventory control are all about getting the product from the producer to the consumer. Promotion is the most highly visible component of the marketing mix. Promotion refers to the techniques for communicating information about products. Promotion involves activities surrounding advertising, sales promotions, publicity, and public relations. Collectively, the marketing mix allows a marketer to better relate to the identified target market. Based on the characteristics of the target market, the marketer will build the marketing mix elements around the target market. Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.2: Explain the purpose of a marketing plan and identify its main components. 60) Why is product development a challenge for marketers? Answer: Faced with competition and shifting consumer preferences, no firm can count on a single successful product to carry it forever. Even products that have been popular for decades need ongoing renewal.

The factor of constant change makes conceiving and developing new products a challenge for marketers. Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 11.2: Explain the purpose of a marketing plan and identify its main components. 61) Why is product placement an effective marketing tool? Answer: Product placement is effective because the message is delivered in an attractive setting that holds the consumer's interest. Product placement is a promotional activity that can be found in movies, TV, and magazines. Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

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62) Discuss the relationship between a marketing strategy and a marketing manager.

Answer: The marketing team can develop a strategy once they have clarified the marketing objectives. Specifically, marketing strategy identifies the planned marketing programs, all the marketing activities that a business will use to achieve its marketing goals, and when those activities will occur. Because marketing planning is an ongoing process–not just a one-time activity–it can be improved through experience by learning from past successes and mistakes.

Marketing managers are the people responsible for planning, organizing, leading, and controlling the organization's marketing resources toward supporting and accomplishing the organization's overall mission. To meet these responsibilities, marketing managers rely on mapping out a clear strategy for planning and implementing all the activities that result in the transfer of goods or services to customers.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Synthesis LO: 11.2: Explain the purpose of a marketing plan and identify its main components.

63) Which is usually the first step in the marketing strategy that allows marketers to focus efforts on a particular group of people or organizations?

A) Distribution B) Product differentiation C) Target market selection D) Pricing E) Integration Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

64) For marketers, what type of variables are lifestyles, opinions, interests, and attitudes?

A) Geographic variables B) Demographic variables C) Psychographic variables D) Product use variables E) Labor market variables Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.3: Explain market segmentation and how it is used in target marketing.

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65) What does the process of product positioning involve?

A) Hiring only employees who have the strongest credentials B) Communicating the nature of a product C) Focusing on only one component of the marketing mix D) Disregarding customers' reactions to a company's products E) Reorganizing employees according to seniority Answer: B Difficulty: Difficult AACSB: Analytical thinking Question Category: Analytical LO: 11.3: Explain market segmentation and how it is used in target marketing.

66) What market segment is based on where the target market lives and how location affects their lifestyle?

A) Demographic B) Behavioral C) Positional D) Geographic E) Psychographic Answer: D Difficulty: Easy AACSB: Analytical thinking Question Category: Concept LO: 11.3: Explain market segmentation and how it is used in target marketing.

67) Which of the following describe(s) measurable traits about a consumer, such as income, gender, or marital status?

A) Psychographics B) Geographics C) Geo-demographics D) Behaviors E) Demographics Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.3: Explain market segmentation and how it is used in target marketing.

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68) How does behavioral segmentation identify target markets?

A) Patterns displayed by consumers B) Consumer characteristics such as lifestyles C) Research that obtains data by watching and recording behavior D) Dividing the market based on needs and wants E) Using psychographics characteristics Answer: A Difficulty: Difficult AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

69) ShipShape Watches wants to sell their watches to those who make more than $50,000 per year. Which of the following is ShipShape Watches using to find their target market.

A) Psychographic variables B) Geographic segmentation C) Product positioning D) Integrated marketing E) Demographic segmentation Answer: E Difficulty: Difficult AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

70) Which of the following is the combination of traits based on location and population characteristics used to identify consumers and act as a common segmentation tool?

A) Psychographic variables B) Behavioral variables C) Marketing variables D) Geo-demographic variables E) Primary variables Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

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71) What type of segmentation is more effective because of the greater number of variables and has consequently become the most common segmentation tool?

A) Demographic segmentation B) Psychographic segmentation C) Behavioral segmentation D) Marketing segmentation E) Geo-demographic segmentation Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

72) What would marketers utilize if they wanted to identify markets where customers had a certain lifestyle, personality, or attitude?

A) Place utility B) Geographic segmentation C) Psychographic segmentation D) Possession utility E) Behavioral segmentation Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

73) What process is used by marketers to communicate the nature of a product to a target segment?

A) Product positioning B) Possession utility C) Promotion D) Product differentiation E) Personal influence Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

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74) Which of the following has emerged from the marketing concept that customers' needs and wants are different and firms should focus their marketing efforts?

A) Target markets B) Geographic variables C) Rational motives for purchase D) Social networking E) Integrated marketing mix Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

75) Which of the following is the process of dividing markets into consumer types, based on similar needs and wants?

A) Geographic segmentation B) Promotion C) Target marketing D) Market segmentation E) Product position Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

76) Which type of market segmentation can be changed by marketing efforts, and therefore is particularly important to marketers?

A) Behavioral B) Geo-demographic C) Geographic D) Demographic E) Psychographics Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

77) Geographic variables describe populations by identifying traits, such as age, income, gender, ethnic background, marital status, race, religion, and social class.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Question Category: Concept LO: 11.3: Explain market segmentation and how it is used in target marketing.

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78) Target marketing requires dividing a market into categories of customer types or segments.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

79) A description such as single, age 20-34, earning $60,000 a year is an example of a psychographic variable.

Answer: FALSE Difficulty: Easy AACSB: Analytical thinking Question Category: Application LO: 11.3: Explain market segmentation and how it is used in target marketing.

80) Psychographics cannot be changed by marketing efforts.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

81) Product positioning is a process used by business who have a narrower range of products, and want to aim at just one segment of the market.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

82) Why is it important the marketers identify market segments in directing their marketing efforts?

Answer: Marketers have long known that products cannot be all things to all people. The emergence of the marketing concept and the recognition of customers' needs and wants led marketers to think in terms of target markets–the particular groups of people or organizations on which a firm's marketing efforts are focused. By definition, members of a market segment must share some common traits that affect their purchasing decisions. In identifying consumer segments, researchers look at several different influences on consumer behavior.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

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83) Explain the difference between demographic and geo-demographic variables.

Answer: Demographic segmentation is a strategy used to separate consumers by demographic variables. Demographic variables describe populations by identifying traits, such as age, income, gender, ethnic background, marital status, race, religion, and social class. As the name implies, geo-demographic segmentation is a combination strategy. Geo-demographic variables are a combination of geographic and demographic traits and are becoming the most common segmentation tools. Segmentation is more effective because the greater number of variables defines the market more precisely.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

84) Identify demographic and psychographic variables.

Answer: Demographic variables describe populations by identifying traits, such as age, income, gender, ethnic background, marital status, race, religion, and social class. Psychographic variables are lifestyles, interests, and attitudes. Psychographic variables are important to marketers because, unlike demographic variables, they can be changed by marketing efforts.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

85) Explain how marketers identify different market segments.

Answer: In identifying market segments, researchers look at a number of different influences on consumer behavior. Some of the variables used for segmentation are geographic, demographic, and psychographic variables. Geographic variables are geographical units that may be considered in developing a segmentation strategy. Demographic variables describe populations, identifying traits such as age, income, gender, etc. Psychographic variables are lifestyles, opinions, interests, and attitudes. Two other segments include geo-demographic and behavioral segments.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

86) What are target markets? Explain the role that target markets play in market segmentation.

Answer: Target markets are groups of people with similar wants and needs. Target marketing requires market segmentation, which is dividing a market into categories of customer types or segments. Once companies identify market segments, they may adopt a variety of marketing strategies that appeal to each segment.

Difficulty: Difficult AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.3: Explain market segmentation and how it is used in target marketing.

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87) Which tool used for gaining decision-making information identifies what customers want and how to fulfill those wants?

A) Market segmentation B) Market research C) Promotion D) Public relations E) Integrated marketing strategy Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

88) Which of the following describes the goal of market research?

A) To better understand how to market items based on how customers behave B) To gain goodwill with consumers by utilizing public relations C) To increase competitiveness by clarifying interactions that affect the marketing decisions D) To conduct studies on customer responses to the marketing mix E) To determine which research method will deliver the most effective results Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

89) Market research can occur at almost any point in a product's life cycle, but it is typically used A) when entering international markets.

B) when sales begin to decline.

C) when competitors release newer, competitive products.

D) when developing new products or altering existing products.

E) when a new product is ready to be released.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Analytical LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

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90) Lester is an intern in the marketing department of a national pizza company. His manager has asked him to determine how franchise store owners might feel about a potential new product, but current data does not exist. Which of the following types of data will Lester have to use for his project?

A) Secondary B) Demographical C) Global D) Psychographic E) Primary Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

91) Which type of market research involves watching consumers and recording their behavior using tools such as camera feeds and computer recordings?

A) Observation B) Secondary research C) Surveys D) Focus groups E) Experimentation Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

92) When gathering opinions about consumer decisions, what type of research tool could be utilized online, by telephone, or face-to-face?

A) Observation B) Secondary research C) Surveys D) Focus groups E) Experimentation Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

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93) What is the advantage of utilizing focus groups for research?

A) They easily generate comparison data with competitors' products.

B) They offer fact-based information on products.

C) They are more structured and are easier to analyze.

D) They allow for more in-depth discussion on complex issues.

E) They are less costly and time consuming.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

94) Which of the following allows researchers to compare the response of similar people under different circumstances?

A) Observation B) Surveying C) Focus group studies D) Experimentation E) Questionnaires Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

95) Which of the following should be used by marketing researchers who want to data provided by the governments on income levels and households in a particular area?

A) Psychographics B) Behavioral research C) Primary research D) Segmentation E) Secondary data Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

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96) After conducting research, the information must be organized into meaningful information.

This is done in which step of the marketing research effort?

A) Study the current situation B) Select a research method C) Collect the data D) Analyze the data E) Prepare a report Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

97) Which of the following describes the purpose of the marketing research report?

A) To identify sources of secondary data B) To describe methodology and findings C) Too identify what the need is and how to meet it D) To explain the methodology of collecting primary data E) To organize data into meaningful information Answer: B Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

98) Which of the following should be considered when selecting a research method?

A) Effectiveness and cost of different options B) The consumer needs C) Efforts currently underway to fulfill consumer needs D) What existing information is available E) How to create primary data Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

99) Marketing research is the study of behavioral variables.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

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100) Primary data is data already available from previous research.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

101) The advantage of using secondary research is data already exists, saving time, effort, and money.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

102) When selecting a research method, a marketing researcher should choose between the use of primary and secondary data.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

103) Describe the difference between primary and secondary data.

Answer: Most research data can be classified into one of two categories. Secondary data are already available from previous research. Several different U.S. government agencies, including the Census Bureau and the Department of Labor, for instance, provide online data collected by the government on geographic and demographic variables. Using secondary data can save time, effort, and money. However, when secondary sources are unavailable or inadequate, researchers must obtain primary data, new data from newly performed research.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

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104) Outline the five steps in the marketing research process.

Answer: 1.) Study the current situation. This can be done by asking what is the need and what is being done to meet it. 2.) Select a research method. In choosing from a wide range of methods, marketers must consider the effectiveness and costs of different options. 3.) Collect data. Most research data can be classified into one of two categories, primary and secondary data. 4.)

Analyze the data. Once data are collected they must be analyzed and organized into meaningful information. 5.) Prepare a report. This report should describe the study's methodology and findings. It should also identify solutions and, where appropriate, make recommendations on a course of action.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

105) How has the importance of selling products internationally expanded the role of marketing research?

Answer: The importance of selling products in international markets has expanded the role of marketing research. For example, when a company decides to sell goods or services globally, it must decide whether to standardize products across all markets or to specialize by offering different versions for each market. Accordingly, market research's orientation has become increasingly globalized.

Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.4: Discuss the purpose of marketing research and compare the four marketing research methods.

106) Which of the following is the study of the decision process by which customers come to purchase and consume products?

A) Marketing B) Segmentation C) Resource management D) Consumer behavior E) Acculturation Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

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107) Which type of behavior do consumers exhibit by regularly purchasing products because they are satisfied with the performance of the product? A) Psychological influences B) Need recognition C) Brand loyalty D) Emotional motives E) Consumer activism Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.5: Describe the consumer buying process and the key factors that influence that process. 108) Which of the following is the influence on consumer behavior that comes from being part of a group with shared values? A) Psychological B) Personal C) Social D) Domestic E) Cultural Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.5: Describe the consumer buying process and the key factors that influence that process. 109) Which is the term that describes what happens after the sale to ensure consumers buy the product again? A) Postpurchase evaluation B) Prepurchase evaluation C) Rational motives D) Emotional motives E) Evoked set Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

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110) Accessing a website in search of articles about a product before its purchase is an example of which part of the consumer buying process?

A) Social networking B) Problem solving C) Information seeking D) Psychological influencing E) Recognizing a need Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Concept LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

111) Which consumer influence includes perceptions, ability to learn, and attitudes?

A) Psychological B) Personal C) Social D) Loyalty E) Cultural Answer: A Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

112) Family members and friends can have a strong impact on consumer choices when acting as A) psychological influences.

B) personal influences.

C) social influences.

D) loyalty influences.

E) cultural influences.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Question Category: Application LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

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113) Which of the following best defines the way of living that distinguishes one large group from another?

A) Consumer B) Subculture C) Social class D) Culture E) Demographic Answer: D Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

114) How do consumers develop opinions and beliefs about a set of products they will consider buying?

A) Through evaluation of alternatives B) Through emotional motives C) Through need recognition D) Through post-purchase evaluation E) Through information seeking Answer: E Difficulty: Moderate AACSB: Application of knowledge Question Category: Critical Thinking LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

115) Which of the following is greatly influenced by nonobjective factors such as sociability, imitation, and aesthetics?

A) Emotional motives B) Post-purchase evaluation C) Rational motives D) Evaluation of alternatives E) Need recognition Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Critical Thinking LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

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116) When making a purchase decision, decisions that include logical evaluation, cost, and quality are what type of decisions?

A) Evoked B) Rational C) Comparison D) Consideration set E) Emotional Answer: B Difficulty: Moderate AACSB: Application of knowledge Question Category: Concept LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

117) If a buyer is unhappy with their purchase decision, what are they more likely to do than those who are happy with their purchase decision?

A) Use a different decision-making process B) Continue to purchase the same product until a replacement is found C) Tell others D) Rely more on rational motives E) Develop a more limited evoked set of purchase options Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

118) Why do marketers study influences on consumer behavior?

A) To better understand individual motivations, perceptions, and ability to learn.

B) To try to identify social influencers and social media sources of influence.

C) To try to explain consumer choices and predict future buying behavior.

D) To better understand the effect of family and culture on buying behavior.

E) To build brand loyalty in all purchase decisions.

Answer: C Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

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119) Which influence on consumer behavior includes lifestyle, personality, and economic status?

A) Personal B) Social C) Cultural D) Behavioral E) Rational Answer: A Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

120) Which of the following describes the evoked set of options consumers developed while seeking information about a good or service?

A) The group of products consumers regularly purchase B) The group of products consumers have considered in the past based on lifestyle C) The group of products consumers have bought in the past and will not consider again D) The group of products consumers will consider buying based on nonobjective factors E) The group of products consumers will consider buying based on their information search Answer: E Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

121) Why do marketers use information gathered from studying the consumer buying process?

A) To counteract the influence of culture on the consumer buying decision B) To identify target markets C) To determine which products to discontinue D) To develop marketing plans E) To develop new products Answer: D Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

122) Rational motives involve nonobjective factors and include sociability, imitation of others, and aesthetics.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Question Category: Application LO: 11.5: Describe the consumer buying process and the key factors that influence that process.

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