Principles of Management Exam Practice Tests
Course Introduction
Principles of Management introduces students to the foundational concepts and practices of effective management within organizations. Covering topics such as planning, organizing, leading, and controlling, the course examines the roles and responsibilities of managers in various settings. Students learn about decision-making processes, leadership styles, motivation theories, and strategies for managing teams and resources. Emphasis is placed on ethical considerations, communication skills, and adapting management techniques to dynamic business environments, providing a comprehensive understanding of how managers drive organizational success.
Recommended Textbook Business in Action 7th Edition by Courtland L. Bovee
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Page 2
Chapter 1: Developing a Business Mindset
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Sample Questions
Q1) An organization that seeks to operate efficiently and effectively to achieve its goals without focusing on financial gains is a ________.
A) business intermediary
B) nonprofit organization
C) service business
D) government-owned corporation
E) goods-producing business
Answer: B
Q2) ________ refers to some aspect of a product or company that makes it more appealing to target customers.
A) Competitive advantage
B) Economies of scale benefit
C) Horizontal integration
D) Vertical integration
E) Barrier to entry advantage
Answer: A
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Page 3
Chapter 2: Understanding Basic Economics
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Sample Questions
Q1) In practice,no economy is truly a free-market economy.
A)True
B)False
Answer: True
Q2) ________ is a situation in which no single firm is large enough to influence prices and distort the workings of the free-market system.
A) Pure monopoly
B) Pure entrepreneurialism
C) Pure competition
D) Regulated monopoly
E) Stabilized monopoly
Answer: C
Q3) When the number of competitors in a market is quite small,a situation known as ________ is created.
A) monopoly
B) duopoly
C) oligopoly
D) monopolistic competition
E) pure competition
Answer: C
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Chapter 3: The Global Marketplace
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Sample Questions
Q1) The ________ was established to foster international financial cooperation and its primary functions include providing short-term loans to countries that are unable to meet their financial obligations and working to alleviate poverty in developing economies.
A) World Trade Organization
B) World Commerce Center
C) European Union
D) North American Free Treaty
E) International Monetary Fund
Answer: E
Q2) In the ________ strategy,a company uses a hybrid approach as it attempts to reap the benefits of international scale while being responsive to local market dynamics.
A) integrated marketing
B) transnational
C) global
D) franchising
E) multidomestic
Answer: B
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Chapter 4: Business Ethics and Corporate Social Responsibility
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Sample Questions
Q1) What is defensive CSR? How is it different from proactive CSR?
Q2) Which of the following is TRUE about strategic CSR?
A) It involves donating money, employee time, or other resources to various causes without regard for any direct business benefits for the company.
B) It is an attempt to balance free-market economics with government intervention.
C) It refers to organizational growth that meets the needs of the present without compromising the ability of future generations to meet their own needs.
D) It involves social contributions that are directly aligned with a company's overall business plans.
E) It refers to the argument that firms should indulge in philanthropy only when there is no conflicts of interest with the profitability of the firm.
Q3) What is ethics? List the components of good business ethics?
Q4) Compare and contrast ethical lapse and ethical dilemma?
Q5) Discuss some of the key responsibilities that employers have regarding employees.Compare them with the responsibility they have toward consumers.
Q6) What is a conflict of interest? How is it related to ethical decision making?
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Chapter 5: Forms of Ownership
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Sample Questions
Q1) You work for a European company that is planning to launch business in the United States.The firm is planning to incorporate the new business as a partnership with a domestic firm in the U.S.Present the arguments for changing the company's decision and incorporating the business as a corporation.
Q2) In a ________,the raider launches a public relations battle for shareholder votes,hoping to enlist enough votes to oust the board and management.
A) guerilla blitz
B) proxy fight
C) tender offer
D) direct offer
E) white knight tactic
Q3) Which of the following is an action that allows the companies to collaborate without formally combining?
A) strategic alliance
B) joint venture
C) merger
D) acquisition
E) amalgamation
Q4) Explain the major disadvantages of incorporating a business as a corporation.
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Chapter 6: Entrepreneurship and Small Business Ownership
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Sample Questions
Q1) Identify and briefly discuss the three basic types of franchises.
Q2) Barbara owns a small florist shop that employs a couple of part-time floral designers.She doesn't expect her business to grow much,but it provides her with a comfortable income and she enjoys what she does.Barbara's business would be described as a ________.
A) mid-size enterprise
B) retail business
C) lifestyle business
D) high-growth venture
E) service business
Q3) One of the general characteristics of a small business is that it typically sells fewer products ________.
A) to a larger customer base
B) to fewer market segments
C) to foreign companies
D) at lower costs to government agencies
E) at higher costs
Q4) When companies go public,they put out an IPO,or initial public offering.
A)True
B)False
Page 8
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Chapter 7: Management Roles, Functions, and Skills
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Sample Questions
Q1) Which of the following statements is TRUE of tactical plans?
A) Tactical plans vary by company and business function.
B) These plans refer to the strategic plans of organizations.
C) Tactical plans are prepared for long-term purposes.
D) Tactical plans cover all functions in an organization.
E) Operational issues are not covered under tactical plans.
Q2) The criteria against which performance is measured are referred to as ________.
A) standards
B) tools
C) controls
D) measures
E) frameworks
Q3) ________ intelligence involves reasoning,problem solving,memorization,and other rational skills.
A) Cognitive
B) Emotional
C) Social
D) Collaborative
E) Networking
Q4) Compare and contrast mission statements,vision statements,and values statements.
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Chapter 8: Organization and Teamwork
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Sample Questions
Q1) Define the five major types of organization structure.
Q2) From the perspective of companies,which of the following is a potential benefit of an unstructured firm?
A) Companies are more certain that they will be able to get the talent they need.
B) Companies have a workforce with increased sense of loyalty.
C) Companies find it easier to groom replacement managers and executives.
D) Companies have clear built-in lines of accountability up and down the chain of command.
E) Companies can ramp capacity up and down more quickly and with less trauma.
Q3) Compare and contrast an unstructured organization with a conventional organization.
Q4) ________ refers to how the various business functions and work specialties are divided across the company.
A) Hybrid structure
B) Line structure
C) Line-and-staff structure
D) Vertical structure
E) Horizontal structure
Q5) What is a team? How does a functional team differ from a cross-functional team?
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Chapter 9: Production Systems
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Sample Questions
Q1) The sequence of activities that take the longest time from start to finish in a PERT diagram is called the ________ path.
A) external
B) lagging
C) minor
D) critical
E) buffered
Q2) Compare and contrast mass production,customized production,and mass customization.
Q3) Corrections will not lead to performance improvements at the leverage point.
A)True
B)False
Q4) ISO 9000 is a methodology used for customized production and avoids the use of standards.
A)True
B)False
Q5) A firm's suppliers are not part of its value chain.
A)True
B)False
Q6) Explain how systems are found in a company.
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Chapter 10: Employee Motivation
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Sample Questions
Q1) When using reinforcement theory,managers try to encourage in a systematic way those actions considered beneficial to the company.
A)True
B)False
Q2) List the managerial strategies that are vital to maintaining a motivated workforce.
Q3) ________ refers to a supposed effect of organizational research,in which employees change their behavior because they are being studied and given special treatment.
A) Herzberg's two-factor theory
B) Maslow's hierarchy
C) Theory X
D) Hawthorne effect
E) Theory Y
Q4) The Hawthorne studies were simpler and less influential than suggested by the Hawthorne effect.
A)True
B)False
Q5) Discuss the criteria that must be met for goals to function as effective motivators.
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Chapter 11: Human Resources Management
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Sample Questions
Q1) Which of the following initiatives is most likely to be taken by a firm that aims to help employees with disabilities perform activities that might otherwise be difficult or impossible for them?
A) informally promoting glass ceiling
B) using job enrichment
C) investing in assistive technologies
D) using succession planning
E) promoting ethnocentrism
Q2) Compare and contrast wage and salary?
Q3) Compare and contrast the terms race and ethnicity.
Q4) Layoffs involve terminating employees because of poor performance or other disciplinary reasons.
A)True
B)False
Q5) When can an employee file a wrongful discharge lawsuit against the employer?
Q6) The Age Discrimination in Employment Act outlaws mandatory retirement based on age alone.
A)True
B)False
Q7) Compare and contrast layoffs with worker buyouts.
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Chapter 12: Labor Relations
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Sample Questions
Q1) Employees in one of the plants of a leather manufacturing company form a labor union to represent all employees of the plant.The union does not give membership to employees of other plants and is not associated with any political party or other union.This union is an example of a ________ union.
A) geographic
B) local
C) craft
D) national
E) skill-based
Q2) Caltrex Manufacturing is a firm that manufactures surgical equipment.The company is unionized and has only one union.The union insists that all the individuals should become a member of the union before being hired by the company.This is an example of a(n)________.
A) intermediate shop
B) union shop
C) agency shop
D) open shop
E) closed shop
Q3) Compare and contrast craft unions and industrial unions.
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Page 14
Chapter 13: The Art and Science of Marketing
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Sample Questions
Q1) The organizational market consists of individuals and families who buy goods and services for personal or household use.
A)True
B)False
Q2) Compare and contrast marketing concept with product and sales concept.
Q3) What is marketing mix? Discuss the four main components of the marketing mix.
Q4) A central element in the marketing concept is involving the customer as a partner in a mutually beneficial relationship rather than treating the customer as a passive recipient of products and promotional messages.
A)True
B)False
Q5) The U.S.Federal Trade Commission (FTC)and the Word of Mouth Marketing Association assert that stealth-marketing techniques are deceptive because they don't give their targets the opportunity to raise their instinctive defenses against the persuasive powers of marketing messages.
A)True
B)False
Q6) Compare and contrast product development with market development.Explain using an example.
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Chapter 14: Product and Pricing Strategies
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Sample Questions
Q1) Using a brand name on a variety of related products is known as ________.
A) brand filling
B) brand extension
C) line extension
D) family branding
E) brand stretching
Q2) Dynamic pricing refers to offering temporary price reductions to stimulate sales.
A)True
B)False
Q3) Target customers are familiar with a brand and are likely to consider buying it.This brand has high brand preference.
A)True
B)False
Q4) Prototypes are ________.
A) layouts used in the design of a product
B) analysts who screen product ideas
C) tools used to design a new product
D) preproduction samples of products
E) networks used in the commercialization of products
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Chapter 15: Distribution and Marketing Logistics
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Sample Questions
Q1) JustBooks Company is a U.S.-based international wholesaler specializing in Afro-American books and children's literature.The firm purchases books from publishers,has physical possession of the books,takes legal title to them,and sells them to retailers for resale.The firm also offers a wide variety of services including setting up displays in retail outlets,and marking prices on books.JustBooks Company can be classified as a(n)________.
A) rack jobber
B) drop shipper
C) broker
D) agent
E) specialty store
Q2) Drop shippers take legal title to and possession of goods from a producer and then resell those goods to retailers or organizational buyers.
A)True
B)False
Q3) Compare and contrast full-service merchant wholesalers with limited-service merchant wholesalers.
Q4) Compare and contrast wholesalers with retailers.
Q5) Compare and contrast merchant wholesalers with agents and brokers.
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Chapter 16: Customer Communication
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Sample Questions
Q1) The single most important idea the company hopes to convey to its target audience about a product is the ________.
A) promotional mix
B) marketing mix
C) core message
D) call to action
E) media mix
Q2) Compare and contrast coupons with rebates.
Q3) Push strategy differs from pull strategy because in push strategy a producer ________.
A) appeals directly to end customers
B) uses integrated marketing communications
C) focuses on wholesalers or retailers
D) uses reminder advertising
E) uses "bait and switch" advertising
Q4) According to the FTC,you can support claims for your product by offering a money-back guarantee or providing letters from satisfied customers.
A)True
B)False
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Chapter 17: Financial Information and Accounting Concepts
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Sample Questions
Q1) Bookkeeping is the clerical function of recording the economic activities of a business.
A)True
B)False
Q2) Describe the major provisions of the Sarbanes-Oxley Act.
Q3) Accrued expenses are expenses that ________.
A) are likely to be incurred at a future time in a different financial year
B) have been incurred but for which bills have not yet been received
C) are long-term liabilities that have been incurred in a financial year
D) have been incurred and for which the bills have been received
E) are likely to be incurred at a future time in the same financial year
Q4) Leverage ratios indicate a company's ability to pay its long-term debts.
A)True
B)False
Q5) Which of the following is classified as a general expense?
A) promotional expenses
B) wages of salespeople
C) legal fees paid
D) advertising costs
E) depreciation costs of showroom
Page 19
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Chapter 18: Financial Management
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Sample Questions
Q1) Compare and contrast secured bonds and debentures.
Q2) Explain why businesses use factoring to raise funds.
Q3) Which of the following is a disadvantage of long-term loans?
A) They cannot provide substantial sums of money to businesses.
B) They require diluting ownership in organizations.
C) They are available to firms with a weak credit rating.
D) Such loans can restrict the way an organization uses its assets.
E) Not all companies can qualify for loans and acceptable terms.
Q4) Forter Consultants is a firm that provides cloud computing and remote storage services to firms in the United States.The company plans to buy more servers to increase its operating and storing capacity.It also creates a budget for the purchase and it estimates the total cost to be about $3 million.The budget created for this transaction is an example of a(n)________ budget.
A) operating
B) project
C) master
D) launch
E) capital
Q5) Compare and contrast various types of budgets.
Q6) Compare and contrast secured loans and unsecured loans.
Page 20
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Chapter 19: Financial Markets and Investment Strategies
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Sample Questions
Q1) The price at which the stock is actually selling is referred to as its ________ value.
A) face
B) par
C) book
D) intrinsic
E) market
Q2) Josephine would like to invest part of her Individual Retirement Account (IRA)in the stock market,but she wants to minimize the risk as much as possible.Which of the following is the most suitable investment alternative for Josephine?
A) financial futures
B) derivatives
C) options
D) preferred stock
E) commodities futures
Q3) Compare and contrast blue chip,income,growth and cyclical stocks.
Q4) Balanced funds refer to funds that invest in a combination of stocks and bonds.
A)True
B)False
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Page 21
Chapter 20: The Money Supply and Banking Systems
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Sample Questions
Q1) Experian,TransUnion,and Equifax are the three major consumer ________ in the United States.
A) credit rating agencies
B) mortgage brokers
C) investment bankers
D) credit unions
E) finance companies
Q2) ________ are not-for-profit,member-owned cooperatives that offer deposit accounts and lending services to consumers and small businesses.
A) Loan associations
B) Retail banks
C) Credit unions
D) Thrift banks
E) Merchant banks
Q3) What is a bubble?
Q4) Compare and contrast independent mortgage companies and mortgage brokers.
Q5) If the Fed sells Treasuries in open-market operations,the country's money supply increases.
A)True
B)False
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