Principles of Management Exam Questions
Course Introduction
Principles of Management introduces students to the fundamental concepts and functions of management that are key to organizational success. This course covers essential topics such as planning, organizing, leading, and controlling, while exploring contemporary management theories and practices. Students will learn about decision-making processes, strategic management, motivation, leadership styles, and communication within organizations. Through case studies and real-world examples, learners develop a critical understanding of how managers operate within dynamic business environments and acquire skills necessary for effective management roles.
Recommended Textbook
Understanding Business 12th Edition by William G Nickels
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Page 2
Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment
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Sample Questions
Q1) After losing her manufacturing job in the U.S. automobile industry, Cho has found that well-paid service-sector jobs require retraining and further education.
A)True
B)False
Answer: True
Q2) Producing a high-quality product will ensure success in the competitive environment.
A)True
B)False
Answer: False
Q3) Which of the following policies would tend to foster entrepreneurship?
A) Minimize taxes and regulations.
B) Promote more regulations to protect the environment.
C) Develop policies to reduce corruption between individuals.
D) Encourage public ownership of businesses.
Answer: A
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Chapter 2: Understanding Economics and How It Affects Business
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Sample Questions
Q1) The consumer price index (CPI) measures what is happening to prices at the wholesale level.
A)True
B)False
Answer: False
Q2) Brianne graduated from college and is looking for her first job. She received a degree in nursing from a well-regarded local university. Brianne has several leads and has heard the nursing market is still strong, so she is convinced that she will locate a good job in the near future. Brianne's current situation is an example of structural unemployment.
A)True
B)False
Answer: False
Q3) Which of the following is a basic right under capitalism?
A) Freedom of collusion
B) Freedom from taxation
C) The right to vote
D) The right to compete
Answer: D
Page 4
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Chapter 3: Doing Business in Global Markets
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Sample Questions
Q1) A(n) ________ refers to a complete ban on importing or exporting of products from a specific country.
A) absolute tariff
B) health quarantine
C) quota
D) embargo
Answer: D
Q2) Efficient currency exchange markets have eliminated countertrade in global business transactions.
A)True
B)False
Answer: False
Q3) ________ tariffs are designed to raise money for the government.
A) Regulatory
B) Revenue
C) Price
D) Profit
Answer: B
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Page 5
Chapter 4: Demanding Ethical and Socially Responsible Behavior
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Sample Questions
Q1) Legal behavior is a first step toward ethical behavior.
A)True
B)False
Q2) Corporate philanthropy refers to the position a firm takes on social and political issues.
A)True
B)False
Q3) Compliance-based ethics codes typically
A) rely on laws and regulations outside the firm for guidance.
B) have a strong affinity for shared accountability among employees.
C) promote a "do-it-right" climate.
D) enable responsible employee conduct.
Q4) An ethical dilemma refers to a situation where you must
A) treat someone unfairly.
B) choose between equally unsatisfactory alternatives.
C) choose between a correct and an incorrect option.
D) balance the concerns of profit and legality.
Q5) Legal behavior and ethical behavior are basically the same. A)True
B)False
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Chapter 5: How to Form a Business
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Sample Questions
Q1) To many businesspeople, one of the major attractions of a sole proprietorship is A) the ability to obtain additional financial resources. B) the protection of limited liability.
C) an unlimited lifespan.
D) the chance to be their own boss.
Q2) Tadashi's uncle passed away and left him a Realty Experts franchise. Tadashi is not a licensed agent or broker, nor does he know the first thing about the real estate business. He plans to sell his Realty Experts franchise to his friend Devonte, who recently got his real estate license. One of the advantages of owning a franchise is that you can decide to sell out to anyone you think is suitable for the business.
A)True
B)False
Q3) In a limited partnership, the general partners should encourage the limited partners to take a more active role in the operations of the business. After all, the limited partner has comparable liability in the business, even though he/she may not be a partner for as long a period of time as the general partners.
A)True
B)False
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Chapter 6: Entrepreneurship and Starting a Small Business
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Sample Questions
Q1) Increased participation in small business exporting owes credit to ________.
A) political constituents who have made inroads abroad.
B) large events such as the Olympics that have brought attention to the potential in world markets.
C) technological advances such as the Internet and PayPal for safely fulfilling orders.
D) partnerships that small businesses have formed with large businesses.
Q2) The executive summary section of the business plan contains
A) computerized information that readers can access interactively.
B) information that will capture the attention of bankers and other investors who receive many business plans every day.
C) qualifications, experience, and education of the entrepreneur and prospective employees.
D) a financial summary prepared by the business's accountant.
Q3) While the first job for many people is working for a small business, larger corporations create most of the permanent new jobs.
A)True
B)False
Q4) List and discuss at least three causes of small business failure.
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Page 8
Chapter 7: Management and Leadership
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Sample Questions
Q1) Supervisory managers are those who directly oversee the activities of workers and evaluate their daily performance.
A)True
B)False
Q2) Genna Raiter, the president and CEO of Car Keepers Garage, has asked several of her managers and employees to help establish a statement to outline the fundamental purposes of their company. The result of this effort is likely to be a document known as a(n)
A) payoff matrix.
B) mission statement.
C) tactical plan.
D) organization chart.
Q3) Staffing involves recruiting, hiring, motivating, and retaining the best people available for the organization.
A)True
B)False
Q4) Middle managers usually are responsible for tactical planning and controlling.
A)True
B)False
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Chapter 8: Structuring Organizations for Todays
Challenges
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Sample Questions
Q1) In today's competitive environment, cost containment is extremely important to survival. Which of the following increases efficiency in the production and distribution of goods?
A) tablets
B) real-time data
C) assembly lines
D) self-managed teams
Q2) While most organizations have a formal organization structure, only poorly managed firms also have an informal organization.
A)True
B)False
Q3) The ________ of a business firm is the system that details lines of authority, responsibility, and position, similar to the structure on organization charts.
A) matrix reloaded structure
B) formal organization
C) informal organization
D) normative design
Q4) Describe two major issues that are important in organizational design.
Page 10
Q5) Discuss Max Weber's views on organization theory.
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Chapter 9: Production and Operations Management
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Sample Questions
Q1) In a just-in-time inventory system, the producer holds large quantities of the materials and components used in the production process in its inventory to ensure that it always has enough on hand.
A)True
B)False
Q2) Operations managers have learned that quality control is not a never-ending process. Just before you add packaging to the finished product, official company inspectors do a random spot-check. All inspections have to occur at the end of a production run because only then can the inspector see the total finished product in order to determine if quality is jeopardized.
A)True
B)False
Q3) In JIT inventory systems a manufacturer normally communicates its production plans to suppliers so that they can deliver needed parts and materials just in time for the manufacturer to use them.
A)True
B)False
Q4) How are MRP and ERP similar? How do they differ?
Q5) What are the ISO 9001 and ISO 14001 standards? Why are they important?
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Chapter 10: Motivating Employees
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Sample
Questions
Q1) Maslow referred to the needs people had for recognition and acknowledgement from others as esteem needs.
A)True B)False
Q2) Ronald, the CEO of Extel Micro-a technology provider with 17,000 employees-answers his own phone and takes calls from employees of all levels. He actually loves to hear about what employees think the company is doing right and what they could be doing better. Ronald is building teamwork by
A) creating an organizational culture that rewards listening.
B) rewarding employees with cash bonuses for good ideas.
C) giving high performers separate perks they value.
D) bolstering employee fairness.
Q3) American employees put great value in being treated fairly. According to equity theory, if things seem unfair, they will do their best to make them equitable by withholding effort, increasing effort, or by rationalizing that they are undeserving of the same as others.
A)True B)False
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Chapter 11: Human Resource Management: Finding and
Keeping the Best Employees
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Sample
Questions
Q1) According to the Need a Job? box in the text, one way to recruit employees is through social media.
A)True
B)False
Q2) According to the Need a Job? box, which of the following strategies can be used to get a new job?
A) Search social media.
B) Post your resume on a bulletin board at Panera.
C) Send your resume to various companies.
D) Cold call companies to check for employment opportunities.
Q3) Reverse discrimination is the term the EEOC uses to refer to activities designed to "right past wrongs" that resulted from discrimination against women and minorities.
A)True
B)False
Q4) Grooming women and minorities for management positions creates fewer hiring opportunities for white men.
A)True
B)False
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Q5) Identify and describe three common methods of training and developing employees.
Chapter 12: Dealing With Employeemanagement Issues
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Sample Questions
Q1) When union members who have a dispute with a company walk around outside the firm's place of business carrying signs and talking to the media and public about their concerns, they are using a tactic known as A) boycotting.
B) estopment.
C) striking.
D) picketing.
Q2) Over the years, Jennifer has acted in a number of supporting roles on TV sitcoms. Her last contract obligated her to perform in 22 episodes for a stipend of $500 per episode. Upon completion of the 11th episode, Jennifer broke her leg and was not able to complete the episodes in a timely manner. The studio claimed that Jennifer broke her contract and they are not obligated to pay her. She is confident that an impartial third party will view her circumstances as exceptional and will rule that she be reimbursed for the 11 performances. She has agreed to mediation.
A)True
B)False
Q3) Identify and discuss three controversial employee-management issues.
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Page 14
Chapter 13: Marketing: Helping Buyers Buy
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Sample Questions
Q1) Firms adopting a relationship marketing strategy view technology and social media as a(n)
A) promising technique to expand to a mass market.
B) threat to the effective and efficient implementation of their strategy.
C) tool with limited value because many people are reluctant to place orders or send information electronically.
D) increased opportunity to personalize marketing campaigns to meet customer needs.
Q2) Mobile apps, like Rewards4You, engage users by combining the most basic elements of social media. These apps are a great benefit to both customers and businesses. Customers get a special deal while businesses are able to get their names out to the friends of users. This is an effective form of promotion.
A)True
B)False
Q3) Setting a price for the product or service is one element of the marketing mix.
A)True
B)False
Q4) Describe the steps involved in conducting marketing research.
Q5) Describe the steps involved in the marketing process.
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Chapter 14: Developing and Pricing Goods and Services
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Sample Questions
Q1) The box, Playing the Name Game explains
A) the importance of reality TV, and the various TV programs that have become international phenomena.
B) the procedure a business goes through to register its domain name.
C) how the positive appeal of a name can go a long way.
D) how it is important for businesses to play a name game with their customers. A company should produce a product and give it a different name in each country where it is sold.
Q2) A leading cause of new-product failure is
A) insufficient competition.
B) product promises that are not delivered.
C) the automation of the product development process.
D) excessive product differentiation.
Q3) The concepts of product lines and product mixes apply to marketers of both products and services.
A)True
B)False
Q4) Demand-based pricing is another name for cost-based pricing.
A)True
B)False
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Chapter 15: Distributing Products
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Sample Questions
Q1) Supply chain management manages the movement of relevant information as well as the movement of parts and finished goods through all organizations involved in the supply chain.
A)True
B)False
Q2) The two basic types of warehouses are
A) public and private.
B) railside and portside.
C) storage and distribution.
D) seasonal and long term.
Q3) In ________, salespeople are independent contractors who not only sell the product, but also recruit additional salespeople.
A) telemarketing
B) two-stage marketing
C) hierarchical marketing
D) multilevel marketing
Q4) Logistics is concerned with the flow of information as well as with the flow of goods.
A)True
B)False
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Chapter 16: Using Effective Promotions
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Sample Questions
Q1) Steve is a salesperson for a firm that markets products in a B2B market. His wife, Fran, is a salesperson for a retail store selling top-quality electronics goods. While Steve is likely to be successful using follow-up after the sale, Fran should avoid this approach.
A)True
B)False
Q2) In evaluating the promotion mix, it's fair to say that large organizations are best reached through personal selling.
A)True
B)False
Q3) Which of the following media enables firms to quickly change their advertising message?
A) irectories
B) magazines
C) newspapers
D) television
Q4) Sales promotion programs can be used as a means to generate employee enthusiasm.
A)True
B)False
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Chapter 17: Understanding Accounting and Financial Information
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Sample Questions
Q1) With increased computer technology, the ability to read and understand financial statements is no longer an important skill for managers.
A)True
B)False
Q2) A statement of cash flows summarizes a company's cash receipts and cash payments over a period of time.
A)True
B)False
Q3) The accounting book or computer program where each day's transactions are first recorded is called a
A) posting workbook.
B) general ledger.
C) balance sheet.
D) journal.
Q4) Earnings per share, return on sales, and return on equity are examples of A) leverage ratios.
B) liquidity ratios.
C) equity ratios.
D) profitability ratios.
Page 19
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Chapter 18: Financial Management
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Sample Questions
Q1) The Making Ethical Decisions box "Good Finance or Bad Medicine" has an important message for managers who make financial decisions. Which of the following statements summarizes this message?
A) Managers must balance good economic decisions with socially forward thinking.
B) Financial decisions must be based on what insurance companies are willing to pay.
C) Checking academic credentials of recently graduated doctors is imperative due to the cost of lawsuits that patients may file if they learn that they were served by a surgeon without a license.
D) The support of a good law firm is worth every penny a hospital might pay. The finance manager should always budget for a legal team.
Q2) No matter the size of the business, finance is a critical activity for
A) profit-seeking, but not for nonprofit organizations.
B) profit-seeking and nonprofit organizations.
C) nonprofit organizations, but not for profit-seeking businesses.
D) accountants, but not for financial managers.
Q3) Identify and describe the major steps involved in financial planning.
Q4) Explain the term leverage. When is it more favorable for firms to use this strategy?
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Page 20
Chapter 19: Using Securities Markets for Financing and Investing Opportunities
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Q1) Investors buying bonds and corporations issuing bonds (both) accept investment risk. Which of the following statements is most correct when it comes to the investment risks that one or the other party accepts?
A) If investor Joe is holding a bond that pays 5% and market interest rates on similar bonds go down, Joe must hold the bond until maturity because if he were to sell it today, he would have to sell it at a discount.
B) If investor Joe is holding a bond that pays 5% and market interest rates on similar bonds go down, Joe's bond is now worth more than its face value, and if he needed to sell it on the secondary market, he could probably sell it at a premium.
C) If investor Joe is holding a bond that pays 5% and interest rates on similar bonds go up, Joe stands to gain more than the face value of the bond if he were to sell it on the secondary market today.
D) If XYZ Corporation wants to issue bonds to pay for an expansion project, and analysts predict that interest rates are projected to climb over the next few years, it is to the corporation's advantage to wait until next year to issue the bonds.
Q2) Discuss the role of investment bankers in the securities markets.
Q3) Explain the differences between preferred stock and common stock.
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Page 21
Chapter 20: Money, Financial Institutions, and the Federal Reserve
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Sample Questions
Q1) After the bank failures that occurred during the Great Depression of the 1930s, the U.S. government formed three organizations: the Federal Deposit Insurance Corporation (FDIC); the Savings Association Insurance Fund (SAIF); and National Credit Union Administration (NCUA) to restore people's confidence and insure deposits.
A)True
B)False
Q2) When the Federal Reserve acts to reduce inflation, they decrease the reserve requirement.
A)True
B)False
Q3) Under the Federal Reserve Act of 1913,
A) membership in the Federal Reserve System was made voluntary for all banks.
B) federally chartered banks were required to join the Federal Reserve System.
C) membership in the Federal Reserve System was required of all banks that had deposits of more than $1 million.
D) all banks were required to hold reserves equal to at least 50 percent of their deposits.
Q4) Compare and contrast the functions of the World Bank and the International Monetary Fund.
Page 22
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Chapter 21: Appendix: Working Within the Legal Environment
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Sample Questions
Q1) Willow is concerned that she is not getting full disclosure of information from a mortgage broker who is hoping to refinance the mortgage on her house. Having recently studied business law, you suggest to Willow that she contact the ________ that was formed after the Dodd-Frank Wall Street Reform and Consumer Protection Act became law.
A) Federal Trade Commission (FTC)
B) Consumer Financial Protection Bureau (CFPB)
C) Due Diligence Agency (DDA)
D) Financial Fairness Consortium (FFC)
Q2) Under contract law, damages are the monetary settlements awarded to a person who is injured by a breach of contract.
A)True
B)False
Q3) A patient injured through the negligence of a health care provider can be awarded compensation through the tort law system.
A)True
B)False
Q4) Explain the difference between statutory law, common law, and business law.
Q5) Describe bankruptcy and three sections of the Bankruptcy Code.
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Chapter 22: Appendix: Using Technology to Manage Information
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Sample Questions
Q1) During the 1980s business technology became known as A) data processing.
B) knowledge management.
C) information systems.
D) personal computing.
Q2) A(n) ________ serves as an entry point to a variety of resources on an organization's information network.
A) personal information manager
B) e-transfer page
C) enterprise portal
D) subscription web page
Q3) The use of antivirus software completely eliminates the risk of downloading infected files.
A)True
B)False
Q4) The software or hardware barrier that a business uses to prevent unauthorized users from gaining access to their intranet is known as a tripware.
A)True
B)False
Page 24
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Chapter 23: Appendix: Managing Risk
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Sample Questions
Q1) Firms can take out term life-insurance policies on their top executives.
A)True
B)False
Q2) Risk management is concerned only with risks to individuals and businesses.
A)True
B)False
Q3) When a firm that is self-insuring against risk decides to cover losses straight out of its budget, it is said to be "going bare."
A)True
B)False
Q4) The National Highway Traffic Safety Administration (NHTSA) provides consumers with recall notices for all makes and models of cars, trucks, motorcycles, and even school buses. In terms of risk management, the purpose of the NHTSA service is A) to reduce risk.
B) to avoid risk.
C) to self-insure against risk.
D) to make available the opportunity for vehicle owners to purchase insurance against risk.
Q5) Explain the four ways of managing risk.
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Chapter 24: Appendix: Managing Personal Finances
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Q1) A financial planner would encourage you to borrow money
A) only to buy assets that are likely to generate income or increase in value.
B) to pay your day-to-day expenses and then to invest your income.
C) only when facing bankruptcy.
D) in order to reduce your debt level.
Q2) Investing in a home is generally considered a A) poor choice when compared to renting.
B) wise investment.
C) luxury that should be postponed as long as possible.
D) good decision, but only if you've saved enough to pay in full with cash.
Q3) One disadvantage of term life insurance is that
A) when renewed it usually is at a higher premium.
B) the risk of lost income from the death of the insured is shifted to the insurance company.
C) it is pure insurance protection for a given time period.
D) it is generally not available to young people.
Q4) Employees of small businesses can contribute to a Keogh plan.
A)True
B)False
Q5) Compare the basic features of the traditional IRA and Roth IRA.
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