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279 terms

BUS 101

SCC
STUDY
PLAY
In order to level the playing field in trade between the U.S. and China, U.S. policymakers have called upon China's government to allow the Yuan (China's currency) to float freely, as other world currencies. Through government regulation, China maintains an undervalued currency, which results in:
Choose one answer.

a. More buying power for Chinese consumers who want to purchase U.S. goods and goods from other countries.

b. Maintaining robust Chinese exports and a favorable balance of trade for China.

c. Developing better relations with industrialized countries who want to increase the value of their exports.

d. Stability and strength of the Chinese Yuan against the U.S. dollar and the euro.
b. Maintaining robust Chinese exports and a favorable balance of trade for China.
A fast-growing form of foreign direct investment is sovereign wealth funds (SWFs). Why do these investments by governments with surplus cash flows worry trade experts?
Choose one answer.

a. SWFs invest in high risk start-ups with no proven history of producing goods and services that developing or developed countries need. They may likely undermine the years of development of growing economies.

b. SWFs have a greater risk of going bankrupt than other investments because governments are not good at running businesses.

c. Some fear that governments investing their SWFs in large firms may gain control of natural resources, sensitive technologies, and the decision making of management.

d. Some trading experts believe that SWFs are supported by terrorist organizations, and their strategy is an indirect way to undermine the creation of U.S. jobs.
c. Some fear that governments investing their SWFs in large firms may gain control of natural resources, sensitive technologies, and the decision making of management.
Denmark requires foreign companies that sell butter in Denmark to sell it in cubes, not tubs. This type of requirement is known as a:
Choose one answer.

a. protective tariff.

b. revenue tariff.

c. quota.

d. nontariff barrier.
d. nontariff barrier
Mini-Case<br/><br/>Since he was five years old, Rhett Tenna struggled with poor eyesight. He suffered through all the names that went along with wearing eyeglasses for most of his young life. Rhett eventually switched from traditional eyeglasses to contact lens, but he always wondered why glasses were considered to be "ugly" and not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eye wear synonymous with high fashion. He opened a specialty store called "The Eyes Have It." His marketing plan was to remove the social stigma of wearing glasses, and replace it with a sense of flair and high fashion. From the day he opened his first store, Rhett's plan met with resounding success. Today, "The Eyes Have It" has grown from that single outlet to a medium-sized company with dozens of stores located in six states, and a manufacturing plant that turns out designer frames.<br/>A recent internal audit, however, suggested a problem that Rhett had not anticipated. The study indicated that the U.S. market is just about saturated and growth of "The Eyes Have It" stores will be very limited. The audit concerned Rhett until he recognized an untapped market existed overseas. If people all over the world have the same problem, the global market opportunities are fantastic! All in favor of going global say: "The Eyes Have It"!<br/>&#160;<br/>The company was informed by the Japanese Ministry of Trade that they could only export 1.5 million pairs of eyeglasses to the Japanese market during a given year. The Japanese have imposed a(n):
Choose one answer.

a. revenue tariff.

b. embargo.

c. import quota.

d. limit order.
c. import quota.
The value of goods imported into France exceeds the value of French exports. This indicates that France:
Choose one answer.

a. Has an exchange rate decrease.

b. Utilizes high tariffs.

c. Has a budget deficit.

d. Has a trade deficit.
d. Has a trade deficit.
U.S. firms that produce sophisticated military hardware are prohibited from exporting that equipment to "unfriendly" governments, such as Iran. This complete ban on exporting sensitive technology to specific countries is an example of a(n):
Choose one answer.

a. import quota.

b. boycott.

c. tariff.

d. embargo.
d. embargo.
The three countries participating in NAFTA are:
Choose one answer.

a. Canada, Panama, and the United States.

b. Mexico, Panama, and the United States.

c. Canada, Nicaragua, and Mexico.

d. Canada, Mexico, and the United States.
d. Canada, Mexico, and the United States.
Which of the following is an advantage of offshore outsourcing?
Choose one answer.

a. Companies can create efficiencies by hiring low-wage employees.

b. Wages increase in the home country.

c. Product quality improves permitting firms to charge more for their products.

d. Communication between the company and its customers improves.
a. Companies can create efficiencies by hiring low-wage employees.
A sociological challenge that must be overcome in order to be successful in the global market is:
Choose one answer.

a. A lack of cultural understanding.

b. An overly anxious desire to please at all cost.

c. Inequality of global natural resources.

d. Wealth management.
a. A lack of cultural understanding.
Nike _________________ its products in foreign countries, where labor is cheap and production sites are owned by other companies. This strategy allows Nike to experiment in new markets without incurring large start-up costs involved with building their own production facilities.
Choose one answer.

a. contract franchises

b. pays governments to market

c. globally licenses

d. contract manufactures
d. contract manufactures
Reviewing the recent experience of the United States in global markets reveals that the U.S has:
Choose one answer.

a. a merchandise trade surplus with the rest of the world.

b. a large trade deficit with China.

c. avoided becoming a debtor nation.

d. attracted very little foreign direct investment.
b. a large trade deficit with China.
_____________ is buying products from another country.
Choose one answer.

a. Importing

b. Outsourcing

c. Retailing
a. Importing
Rosa's aunt was taking a cruise to Brazil. She suggested to Rosa that she would be glad to buy her some jewelry while in port in Rio de Janeiro because the exchange rate would be to her benefit. This means:
Choose one answer.

a. The currency in Rosa's home country is weak against the Brazilian currency.

b. The currency in Rosa's home country will be almost equal to the Brazilian currency; otherwise it would not be a good exchange.

c. The currency in Rosa's home country is devalued.

d. The currency in Rosa's home country has strength against the Brazilian currency.
d. The currency in Rosa's home country has strength against the Brazilian currency.
As students think about a career in the business world today, which of the following is a good strategic suggestion?
Choose one answer.

a. Studying a foreign language.

b. Securing a job with a large multinational corporation.

c. Stay away from franchising due to the saturation of this form of business globally.

d. Avoid spending a lot of time studying fluctuations in currencies because a global currency is eminent.
a. Studying a foreign language.
__________ occurs when a country has a monopoly on producing a product or is able to produce it at a cost well below that of all other countries.
Choose one answer.

a. Comparative advantage

b. Absolute advantage

c. Complete advantage

d. Dumping advantage
b. Absolute advantage
_______ tariffs are designed to raise money for the government.
Choose one answer.

a. Regulatory

b. Revenue

c. Price

d. Profit
b. Revenue
A benefit of contracting with export trading companies is:
Choose one answer.

a. They are the experts in establishing trading partners abroad, and negotiating all the details in retaining customers.

b. They are experts in staying out of the financial transactions of establishing new markets.

c. They will always assume the risk if your product does not sell to the foreign customer.

d. They keep you legal because they serve as the franchisor and make certain that your products meet ISO requirements.
a. They are the experts in establishing trading partners abroad, and negotiating all the details in retaining customers.
One of the purposes of Export Assistance Centers is to:
Choose one answer.

a. help multinational corporations reach agreements with foreign governments.

b. provide subsidies to domestic firms hurt by dumping by foreign firms.

c. provide trade-finance support for small and medium-sized firms involved in direct exporting.

d. encourage domestic firms to become more competitive by forming keiretsu-like organizations, much like those found in Japan.
c. provide trade-finance support for small and medium-sized firms involved in direct exporting.
One objective of NAFTA is:
Choose one answer.

a. increase trade barriers between the countries involved.

b. decrease investment opportunities in the countries involved.

c. promote conditions of fair competition for the three trading partners.

d. improve working conditions in Central America.
c. promote conditions of fair competition for the three trading partners.
Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies are the result of:
Choose one answer.

a. negotiated rate adjustments between the U.S. government and the World Trade Organization.

b. decisions made by the Federal Reserve Board of Governors in order to implement monetary policy.

c. fluctuations in the world price of gold.

d. changes in the supply of and/or demand for dollars in the global currency market.
d. changes in the supply of and/or demand for dollars in the global currency market.
In an effort to promote the importance of a valuable education, the faculty and staff at the local community college are trained to ask each student about their career preferences, rather than suggest courses that may not benefit the student's future goals. Although it would be tempting to suggest courses just to increase the College's enrollment, employees know that it is more important to serve each student well, even if it means suggesting courses and/or degrees offered at other institutions. This approach is consistent with:
Choose one answer.

a. an integrity-based ethics code.

b. a compliance-based ethics code.

c. a response to a government mandate.

d. a personal responsibility commitment.
a. an integrity-based ethics code.
Which of the following terms describes someone who reports illegal or unethical behavior?
Choose one answer.

a. whistleblower

b. horn blower

c. watch tower sentinel

d. integrity watchdog
a. whistleblower
Compliance based ethics codes typically:
Choose one answer.

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.
a. rely on laws and regulations outside the firm for guidance.
Which of the following indicates that U.S. businesses are demanding socially responsible behavior from their international suppliers?

a. The establishment of the Equal Opportunity Employment Commission

b. The decision of Wal-Mart to open stores globally

c. The decision of Phillips-Van Heusen to cancel orders from suppliers that violate its ethics code

d. The creation of the North American Free Trade Zone (NAFTA) between the U.S., Canada, and Mexico
c. The decision of Phillips-Van Heusen to cancel orders from suppliers that violate its ethics code
Corporate ________ covers issues such as setting minority hiring practices, manufacturing safe products, and minimizing pollution.

a. responsibility

b. philanthropy

c. diversity

d. structure and strategy
a. responsibility
The boxed material entitled "Reaching Beyond Our Borders" that told the story about Joe, the Motorola engineer, suggests that U.S. firms operating overseas are:

a. Not as flexible on social issues as local employees would like them to be.

b. Exploiting employees by working them long hours at low pay.

c. Complying with the ethical standards of the people they employ, in the countries in which they are operating.

d. Responding to their stockholders desire for profits.
c. Complying with the ethical standards of the people they employ, in the countries in which they are operating.
A(n) _______ -based ethics code defines corporate values; creates a supportive environment, and, stresses shared accountability among employees.
.

a. social

b. corporate responsibility

c. compliance

d. integrity
d. integrity
Ethical dilemmas in business:
.

a. force us to make poor choices.

b. always end up bringing out the best in us.

c. often force us to choose between equally unsatisfactory alternatives.

d. define us as being moral absolutists or moral situationalists.
c. often force us to choose between equally unsatisfactory alternatives.
Several outside groups regularly monitor the activities of Metro Chemical Corporation. These groups are interested in the firm's involvement and enforcement of their ethical and social responsibility policies. Who of the following is the <u>least likely</u> to be among the "watchdog" groups?
.

a. The financial officer of a church with funds invested in the chemical company.

b. Overseers from the World Trade Organization (WTO).

c. A student in environmental engineering attending a local college.

d. The president of the union representing the workers at the chemical company.
b. Overseers from the World Trade Organization (WTO).
Which of the following would be a unique focus of an integrity-based ethics code?
.

a. Increased control over employee actions.

b. Shared accountability among employees.

c. Increased penalties for code violators.

d. Improved awareness of the relevant laws.
b. Shared accountability among employees.
Which of the following industries has been deregulated?
.

a. Chemicals

b. Agriculture

c. Airlines

d. Steel
c. Airlines
Mini-Case<br/><br/>Brian and Sondra have just opened a new Cajun restaurant on the edge of town, Cajun Cookin' Inc. They own the land and building and have a brand-new kitchen as well as a lovely seating area, filled with mementos from the South. They have a liquor license and make wonderful Southern drinks. They are quite pleased that members of the community are helping their business grow by coming in for a meal or a drink after work. They are good businesspeople who pay their bills on time and as a result have great relationships with the vendors that supply them food.<br/>&#160;<br/>One day as Brian was speaking with one of his customers a shriek went up from the other side of the restaurant. When he rushed over, he found that one of his customers had spilled hot tea on her arm. If this customer was so inclined, she could __________ and the court would likely find in her favor.
.

a. sue Brian for breach of contract

b. sue the restaurant for negligence

c. sue the restaurant under statutory law

d. She can do nothing about this except not go to the restaurant ever again.
b. sue the restaurant for negligence
A government policy aimed at reducing the purchase of a specific good through increased taxes has been most often applied to:
.

a. beer.

b. sports cars.

c. white bread.

d. diet soft drinks.
a. beer.
Allison 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 Allison that she contact the ________________________ that was formed after the Dodd-Frank Wallstreet 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)
b. Consumer Financial Protection Bureau (CFPB)
The number of personal bankruptcies has:
.

a. significantly decreased as a result of the Bankruptcy Reform Act.

b. increased.

c. nearly reached the level of business bankruptcies.

d. remained unchanged.
b. increased.
Your 15-year-old brother comes home with the great news that he has decided to buy his first car and has just agreed to give $10,000 to a complete stranger. He signed the contract and just needs to pay the stranger and pick up the car. Your dad is upset and calls the stranger to tell him your brother will not be buying the car. The stranger can:
.

a. sue your brother for breach of contract.

b. sue your dad for breach of contract.

c. sue your brother for specific performance.

d. do nothing.
d. do nothing.
Some economists advocate a ____________ on the consumption of such products as gasoline, liquor, cigarettes, and even soda pop, in the hope that consumers will think about how their purchases are having negative impacts on themselves and their environment.
.

a. progressive tax

b. sin tax

c. flat tax

d. tax credit
b. sin tax
A(n) __________ occurs when one party fails to follow the terms of a contract.
.

a. breach of contract

b. discharge of obligation

c. obligation failure of enforcement

d. infringement of contract
a. breach of contract
You and your boss agree to terminate your employment contract because you want to devote more time to school. This breach of contract would likely be resolved by:
.

a. a specific performance requirement.

b. the payment of damages.

c. a judge.

d. a discharge of obligation.
d. a discharge of obligation.
The body of law created by court decisions rendered by judges is called __________ law.
.

a. precedent

b. statutory

c. common

d. tort
c. common
Naomi is planning to invest in a new online franchise - the Novel Artist, Inc. The franchisor provides proprietary software and training for designing invitations and cards for special occasions such as weddings, graduations, and birth announcements. The franchisee is obligated to pay a monthly fee to the franchisor. Naomi will use the software to create her own special designs that she will ultimately feature on her website. She also has chat availability so she can accommodate customers with special requests. Order turn-around time must be fast. She can only take on as many clients as she can make good on delivery. An advantage of Naomi's online franchise is:
.

a. She has a limited territory.

b. She has a narrow product offering.

c. She does not need name recognition or marketing assistance.

d. She has an unlimited territory.
d. She has an unlimited territory.
In the Legal Briefcase box, "Virtual Companies,"
.

a. The box discusses the Vermont Teddy Bear Company and the difficulty the company experienced when transitioning from an S-Corporation to a C-Corporation.

b. The box talks about a newly created LLC in Vermont called the Virtual Company, where all official filing is electronic, and members contribute their skills through electronic communication.

c. The box discusses how the state of Vermont wants to attract business, yet refuses to permit the electronic submission of filing for any form of business ownership.

d. The box talks about the Vermont maple syrup industry and how due to the fact that it is a seasonal business, it cannot exist virtually. The labor intensive business requires the expertise of experienced tree tappers.
b. The box talks about a newly created LLC in Vermont called the Virtual Company, where all official filing is electronic, and members contribute their skills through electronic communication.
Marco is a franchisee with Daggies, a chain of sandwich shops. His business was doing well until several Daggies franchisees got in trouble and were forced to close their shops. Soon afterward, Marco's business deteriorated and he too was forced to close. This is an example of:
.

a. An economic shakeout at work.

b. The coattail effect.

c. The law of diminishing returns.

d. Management by exception.
b. The coattail effect.
In the Thinking Green box titled, "Play Ball but Play Green", The Washington Nationals baseball team is featured as a franchised business that demonstrates environmental stewardship by:
.

a. Replacing all sod in the stadium with astro-turf to conserve water.

b. Building a LEED certified building and initiating recycling programs.

c. Joining several other baseball franchises and only washing uniforms in phosphate-free detergents because the run-off eventually ends up in our drinking water supply.

d. Painting the steel beams and seats in the stadium "green" and continuously flashing the words "green" on the display monitors to remind everyone to use the waste cans and to clean around their seats before departing the stadium.
b. Building a LEED certified building and initiating recycling programs.
A(n) _________ occurs when one company buys the property and obligations of another company.
.

a. cooperative

b. hostile takeover

c. leveraged buyout

d. acquisition
d. acquisition
Compared to partnerships and sole proprietorships, a major <u>advantage</u> of the C (conventional) corporation as a form of business ownership is that it:
.

a. Has the ability to raise more money.

b. Is easier and less expensive to form.

c. Qualifies for simplified tax treatment.

d. Creates unlimited liability for its owners.
a. Has the ability to raise more money.
Mel, Tim, and Bill agreed to partner in a small rehab business. Initially, they were enthusiastic contributors until their first project took more work than Mel initially estimated; Tim wanted morning meetings and long lunch hours; and, Bill decided to go on vacation even though the project was not complete and ready to sell. As the Spotlight on Small Business box, titled, "The Ties That Bind" indicates,
.

a. It's smart to begin the partnership with honest communication of what each partner expects to give and get from the partnership.

b. Organize the business as a limited liability company to reduce the financial risks that put pressure on members of the partnership.

c. Designate one of the partners as the primary partner with final authority to call all the shots.

d. Enter into partnerships with people who have similar educational and cultural backgrounds and similar personalities.
a. It's smart to begin the partnership with honest communication of what each partner expects to give and get from the partnership.
Several years ago, Regis Corporation, a very large hair styling salon company purchased 60 "Your Father's Mustache" salons. Although this was initially an acquisition, the merging of these two businesses was a(n) ___________. Regis went on to purchase several hair care product companies. Joining forces with hair care product companies would represent a ____________.
.

a. conglomerate merger; horizontal merger

b. vertical merger; horizontal merger

c. horizontal merger; vertical merger

d. conglomerate merger; conglomerate merger
c. horizontal merger; vertical merger
When a sole proprietor dies:
.

a. The sole proprietor's heirs have the option of taking over the business.

b. The business is sold to a larger corporation.

c. The company continues to function as it always has.

d. The company always closes down.
a. The sole proprietor's heirs have the option of taking over the business.
_____________ are companies that are similar to S Corporations but are not restricted with similar eligibility requirements.
.

a. Regulated equity companies

b. Corporate cooperatives

c. Limited liability companies

d. Private drawing companies
c. Limited liability companies
A firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company is called a:
.

a. corporate raider.

b. takeover specialist.

c. financial capitalist.

d. venture capitalist.
d. venture capitalist.
Located on Monsanto's world headquarters campus, the Nidus Center is a unique ___________ facility. The tenants are biotechnology companies who are at various stages of product development. The agricultural giant, Monsanto, the Danforth Foundation, Washington University St. Louis, St. Louis University, and several venture capital firms contribute seed money for these small start-up ventures that receive approval to further develop their ideas at the Nidus Center.
.

a. incubator

b. Intrapreneurial

c. enterprise zone

d. micropreneurial
a. incubator
As a result of corporate downsizing, Alex lost his job as an information systems manager for a large telecommunications company. A bonafide computer geek in his own right, Alex knew that several of his past company contacts often outsourced their computer problems. He decided it was a good time to test the waters and see if he could secure enough computer clients to be in business for himself. His success demonstrated that:
.

a. starting your own business can quickly provide security and profits.

b. people always tend to hire people they know from past associations.

c. the service sector is not an area of significant growth.

d. successful big businesses often create profitable opportunities for small businesses.
d. successful big businesses often create profitable opportunities for small businesses.
The U.S. government's Immigration Act of 1990:
.

a. encouraged entrepreneurs to come to the U.S. through "investor visas".

b. established a government program to teach American workers displaced by immigration how to start their own businesses.

c. established guidelines to help entrepreneurs recruit legal aliens as a source of low cost labor.

d. proposed an exchange program for American and European entrepreneurs to temporarily live internationally in order to open up foreign branches for their businesses.
a. encouraged entrepreneurs to come to the U.S. through "investor visas".
A successful web-based strategy that helps a business spread the word about its web site and products is called _____________.
.

a. wildfire marketing

b. "its all about the buzz"

c. social marketing

d. affiliate marketing
d. affiliate marketing
One of the challenges of running a home-based business is:
.

a. an increase in business risk.

b. managing the extra time on your hands.

c. keeping work and family tasks separate.

d. burdensome tax laws.
c. keeping work and family tasks separate.
Peppy knows a lot about marketing, but not much about the legal or financial aspects of starting a new business. He wants to consult with a lawyer and accountant, but his budget is tight with all of the expenses involved in getting Peppy's Pizzazzeria up and running. Peppy should:
.

a. delay talking with a lawyer and accountant until the business has established a positive cash flow for at least one year.

b. trust his basic instincts and try to put it together without the advice of lawyers and accountants.

c. consult with a lawyer and accountant even though the budget is tight.

d. immediately hire full time lawyers and accountants for his staff.
c. consult with a lawyer and accountant even though the budget is tight.
According to SBA guidelines, a manufacturing firm with 1,000 employees:
.

a. would be classified as a large firm in the industrial sector.

b. may be classified as a small business depending upon the size of other firms in the industry.

c. is too small to achieve the efficiencies of large scale production.

d. is classified as an S corporation.
b. may be classified as a small business depending upon the size of other firms in the industry.
Small businesses are important to the U.S. economy because:
.

a. they fill-in the gaps when large businesses want to let workers go on vacation; or when large businesses want to temporarily cease production

b. banks and other financial services companies would not have borrowing customers, because small businesses borrow more than large businesses

c. they pay most of the tax revenue collected by the U.S. government

d. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP
d. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP
Successful entrepreneurs are self-nurturing. This means they:
.

a. look to others for strength and encouragement.

b. self-finance their business with no assistance from others.

c. perform all business operations by themselves.

d. believe in themselves and their ideas.
d. believe in themselves and their ideas.
How are managers today different from managers in the past?
.

a. Managers today are more likely to reprimand workers

b. Managers in the past would use praise and gentle suggestions

c. Managers in the past were less loyal to their employer

d. Managers today emphasize teamwork
d. Managers today emphasize teamwork
The revolution in management that is currently underway suggests that the most effective managers of the future will:
.

a. be very strict in their treatment of workers.

b. emphasize individual initiative rather than teamwork.

c. specialize in performing one of the four management functions.

d. emphasize team work.
d. emphasize team work.
__________ planning determines the major goals of an organization and lays the foundation for obtaining and using resources to achieve those goals.
.

a. Strategic

b. Contingency

c. Central

d. Tactical
a. Strategic
One difference between managers and leaders is that:
.

a. managers are found in businesses while leaders operate in nonprofit organizations.

b. mangers work to achieve stability while leaders embrace change.

c. managers use an autocratic approach while leaders embrace a democratic style.

d. all employees can manage, but only top managers can lead.
b. mangers work to achieve stability while leaders embrace change.
Which of the following is involved in setting work standards and schedules needed to implement the firm's tactical objectives?
.

a. Mission statement

b. Tactical planning

c. Operational planning

d. Contingency planning
c. Operational planning
A(n) __________ is used by an organization to show who is accountable for the completion of specific work and who reports to whom.
.

a. balance sheet

b. Venn diagram

c. stakeholder outline

d. organization chart
d. organization chart
___________ skills involve a manager's ability to picture the organization as a whole and the relationship among its various parts.
.

a. Creative

b. Technical

c. Conceptual

d. Autonomic
c. Conceptual
When we think of successful music entertainment groups of the past sixty years, the Beatles&#153; almost always appear in the top 5! In the early days, the entertainment group's life cycle could have ended as so many other rock groups do - here today, gone tomorrow. The four musicians were definitely creative and passionate about their craft and genre of music. As the informal leader of the group, John Lennon _____________ the others to make important compositional contributions. All four members had the opportunity to create musical compositions and receive copyright credit for their contributions.
.

a. transformed

b. enabled

c. empowered

d. commanded
c. empowered
Jamal is part of a management group that is examining whether his company, State Engineering, should offer some important new services that would broaden its business by appealing to a different group of potential clients. Jamal's group is involved with:
.

a. contingency planning.

b. operational planning.

c. strategic planning.

d. tactical planning.
c. strategic planning.
By completing the courses needed to obtain a college major in accounting, marketing, or some other field, a student can go a long way toward acquiring the _________ skills managers need to rise through the ranks of their area of specialization.
.

a. autocratic

b. technical

c. human relations

d. secondary
b. technical
Mini-Case<br/><br/>Angelica Canizales is the CEO of Mucho Dinero Enterprises. Sales have declined for four consecutive years and the firm's accountants have reported net losses in each of the last two years. Employees appear demoralized and frustrated. Recently, Angelica met with managers from marketing, production, and finance to listen to their views regarding the company's problems. The managers unanimously agreed that the main problem was a lack of communication between the several functional areas of the business. Each manager felt that the firm could increase quality and customer satisfaction with better interdepartmental communication. Angelica also met with marketing and production employees to get their respective opinions on the problems of the firm. One employee from the production department observed that, "We have so many layers of management that it takes forever to make decisions." An employee from marketing complained that, "This place is so bogged down with rules and regulations that there is no opportunity to be creative." Several employees shared their opinions regarding their bosses. Specifically, one employee expressed "My boss never pays attention to my ideas. He just issues orders and expects me to obey them." Angelica decided, after listening to many comments from employees, suppliers, and customers, that the only way to end Mucho Dinero's slide was to completely rethink the firm's structure and to make radical changes in its organization. She presented her ideas to the board of directors, promising to voluntarily resign if her efforts to reorganize did not return the firm to profitability.<br/>&#160;<br/>Angelica's decision to completely redesign Mucho Dinero's organization indicates that she believes the best approach to her firm's problems is:
.

a. competitive benchmarking.

b. flexible departmentalization.

c. restructuring.

d. organizational therapy.
c. restructuring.
Multinational pharmaceutical companies who during the past 20 years preferred to contract with companies in India and other places with cheap labor are turning back to the U.S. to produce their products. The recent popularity of _______________ is due to compliance issues and legal issues, as well as the quality of output.
.

a. market transition

b. market transformation

c. outsourcing

d. insourcing
d. insourcing
In recent years, large organizations have tried to improve their efficiency in communication and decision making by:
.

a. creating specific rules for everyone to follow.

b. eliminating several layers of management.

c. restructuring into a bureaucratic organization.

d. reducing the span of control for managers.
b. eliminating several layers of management.
During the past six years, the marketing department manager at Creative Concepts International made a strong push to hire mover/shaker professionals that had superior performance records prior to joining this company. It didn't take long for these enthusiastic marketers to recognize the many talents within their department. They marveled at how much they were like each other and how they seemed to agree with each other's work styles and ideas. After a while, it became difficult for others in the organization to present to this group. If the idea did not originate within the marketing department, marketers did not give it much credence. Management counselors would describe this phenomenon as _____.
.

a. departmentalization clique

b. inter-office competition

c. forward thinking friction

d. groupthink
d. groupthink
In open organizations the informal organization can be:
.

a. a hindrance to effective management.

b. an asset that promotes harmony among workers.

c. a roadblock to the corporate culture.

d. part of the formal organization.
d. part of the formal organization.
Carlos is the person to see in the welding department if you are a new employee. While he is not a manager, he is the person that most of the others in the department look to for advice and assistance. Carlos is an important member of the firm's:
.

a. supervisory management.

b. participatory control.

c. informal organization.

d. closet cabinet.
c. informal organization.
Heather works as a sales representative for the Westerly Company. She really enjoys working for Westerly, because the company treats her and other sales representatives as highly valued employees. Sales reps at Westerly are given freedom and flexibility in their relationships with customers. While there are only a few layers of management at Westerly, Heather has found that these managers try their best to support and assist her efforts. Based on Heather's experience, it appears that Westerly is a(n):
.

a. bureaucratic organization.

b. inverted organization.

c. tall organization.

d. casual organization.
b. inverted organization.
Max Weber favored which of the following?
.

a. Inverted organizations

b. Worker participation in decision making

c. Staffing and promotions based on qualifications

d. Flat organizations
c. Staffing and promotions based on qualifications
Which of the following is an advantage of a line organization in a large business?
.

a. It does not require specialists to advise people along the line

b. Responsibility and authority are clearly defined

c. Each worker has several supervisors

d. It is very flexible
b. Responsibility and authority are clearly defined
Which of the following is considered to be an advantage of functional departmentalization?
.

a. Employees begin to identify with their department and its goals rather than with the goals of the entire organization

b. People in the same department tend to think very differently

c. Departments are isolated from one another

d. Employee skills can be developed in depth
d. Employee skills can be developed in depth
Production management is the traditional term used to describe all the activities managers do to help their firms create:
.

a. resources.

b. goods.

c. services.

d. equities.
b. goods.
Experts in operations management for service industry type businesses stress:
.

a. using records from accounting to determine what business to go after.

b. relying on one's individual operation as opposed to developing partnerships.

c. training employees on quality management.

d. training employees to always adhere to only one way of doing things.
c. training employees on quality management.
Contemporary operations management planning is an <i>interfirm</i> process. This means:
.

a. the process must integrate all of the functional units of a firm's operation, including production, marketing, finance, and logistics.

b. the process is a confidential plan that is not shared with suppliers or customers. It stays within the firm.

c. it is a process where several firms work closely together to produce goods and services, and anticipate a changing environment.

d. it is a process that seeks stability by adhering to top down management.
c. it is a process where several firms work closely together to produce goods and services, and anticipate a changing environment.
SitRite Furniture Company uses labor and machinery to transform wood, plastic, metal and cloth into comfortable chairs, sofas, and love seats. This process creates:
.

a. form utility.

b. place utility.

c. use facility.

d. intangible productivity.
a. form utility.
For most service businesses the quality standard has become:
.

a. providing prompt and predictable service.

b. providing a competitive level of service at the lowest cost.

c. delighting customers by anticipating their needs.

d. less important than it is for manufacturing businesses.
b. providing a competitive level of service at the lowest cost.
Initially, ATM's (automated teller machines) were introduced so that customers could make withdrawals from their bank accounts, day or night. As the technology improved, the machines offered a variety of services including the acceptance of deposits, the ability to get credit card advances, check your bank account balances, and even purchase prepaid cell phone credit. ATMs now offer:
.

a. flexible manufacturing for its customers.

b. lean services because it only needs to keep a certain amount of cash in each machine.

c. technology similar to CAD.

d. faster service and mass customization.
d. faster service and mass customization.
Operations management in the service sector is focused on creating:
.

a. good experiences for those who use the service.

b. jobs for the local community.

c. additional customer expectations.

d. inexpensive ways to get things done.
a. good experiences for those who use the service.
____________ examines statistical samples of product components at each stage of the production process and plots the results on a graph in order to spot and any variances from desired quality levels.
.

a. CAD/CAM

b. Econometrics

c. Analysis of variance

d. Statistical process control
d. Statistical process control
A PERT network consists of activities linked by arrows. Suppose two of the activities on the network are labeled "A" and "B". An arrow from "A" to "B" indicates that:
.

a. the same resources used to complete "A" are also used to complete "B".

b. "A" and "B" can be completed at the same time.

c. "A" takes longer to complete than "B".

d. "A" must be completed before "B" can begin.
d. "A" must be completed before "B" can begin.
A firm that is certified as meeting both ISO 9000 and ISO 14000 standards has demonstrated:
.

a. world-class management of both quality and environmental standards.

b. sound financial and marketing practices.

c. ethical treatment of both customers and employees.

d. that its recruitment and training programs for employees protect and promote basic human rights.
a. world-class management of both quality and environmental standards.
__________ involves computers directly in the production process.
.

a. CAD

b. CAM

c. AMDA

d. AMCAP
b. CAM
In ___________, materials are physically or chemically changed to produce a product.
.

a. process manufacturing

b. assembly processes

c. utilitarian production

d. diffusive manufacturing
a. process manufacturing
Efforts to redesign and rebuild America's manufacturing base are likely to:
.
a. fade in importance as foreign manufacturers continue to gain control of important markets.

b. continue to be an important issue in the near future.

c. focus on government efforts to foster performance in a few key industries.

d. give way to an intense effort to convert the U.S. to an entirely service-based economy.
b. continue to be an important issue in the near future.
The Ritz-Carlton hotel offers restaurants with the finest service, elevators that run smoothly, and a front desk that processes people quickly. Many times fresh-cut flowers are in the lobbies and dishes of fruit are in each room. __________ is responsible for implementing these customer benefits.
.

a. Human resources management

b. The management staff

c. Operations management

d. Production management
c. Operations management
Most new manufacturing facilities use:
.

a. continuous processes.

b. intermittent processes.

c. traditional processes.

d. synthetic processes.
b. intermittent processes.
Which of the following statements best reflects the approach state and local governments take to influence the location decisions of businesses? State and local governments:
.

a. often engage in fierce competition to attract businesses, including the offer of tax breaks, zoning changes, and financial aid

b. try to avoid competition with other areas, because such competition usually backfires and creates ill-will

c. no longer pursue new businesses, because they have found that attempts to attract businesses are usually too expensive to justify the results

d. work primarily through the federal government and the Small Business Administration to obtain financial assistance for firms seeking to locate in their area
a. often engage in fierce competition to attract businesses, including the offer of tax breaks, zoning changes, and financial aid
Cooltreet, Inc., combines sugar, cream, eggs, and flavorings, then churns and cools the resulting mixture to a very low temperature until it freezes, creating ice cream. The method Cooltreet uses is an example of:
.

a. an analytic production system.

b. a process manufacturing.

c. an assembly process.

d. a symbiotic process.
b. a process manufacturing.
___________ utility is the value added by the creation of finished goods and services using raw materials, components, and other inputs.
.

a. Manufacturing

b. Marginal

c. Consumption

d. Form
d. Form
Courtney was planning a new product launch. She knew that the art department was ready to work on the promotional pieces now, but they couldn't start until the strategy group established the price point and the purchasing group obtained the paper needed to make the promotional piece. Establishing price points would take about a week and was dependent on manufacturing getting the costs to the strategy group. This was expected a week from today. The purchasing group indicated the paper could be obtained locally the same day it was requested. Assuming things go as planned and based on this information, when will the art department be able to begin work on the promotional pieces?
.

a. Immediately

b. 1 week

c. 2 weeks

d. 1 month
c. 2 weeks
Operations management is a specialized area in management that converts resources into:
.

a. services, rather than goods.

b. goods, rather than services.

c. both goods and services.

d. financial data.
c. both goods and services.
___________ is the characteristic of work concerned with the degree of freedom, independence and discretion an employee has in scheduling work and determining procedures.
.

a. Autonomy

b. Interdependence

c. Feedback

d. Task significance
a. Autonomy
Matt works for a sports marketing firm. He feels that he has been treated unfairly by the organization. He helped three other employees organize a series of successful street hockey tournaments in different regions of the country. While the other employees were given a bonus and corporate recognition, his efforts were ignored. According to equity theory, Matt is likely to respond by:
.

a. ignoring the perceived inequity.

b. reaching the conclusion that his treatment is not related to the treatment of others.

c. reducing his efforts on future projects.

d. threatening the boss.
c. reducing his efforts on future projects.
_________ is the term William Ouchi used to refer to the management approach typically used by firms in the United States.
.

a. Type A

b. Type Z

c. Theory Q

d. Theory J
a. Type A
Maslow placed _________ needs at the highest level of his hierarchy.
.

a. self-actualization

b. esteem

c. deferred

d. social
a. self-actualization
Which of the following is <u>not</u> considered one of Herzberg's strategies for creating enthusiasm at work?
.

a. Focus on making the job interesting

b. Similar pay and benefits for a similar job

c. Company and management support in achieving employee objectives

d. Provide opportunities for advancement and added responsibility
b. Similar pay and benefits for a similar job
A strength of Generation X managers is likely to be their:
.

a. loyalty to the firm.

b. individualistic approach to problem solving.

c. ability to provide feedback to employees.

d. willingness to sacrifice other aspects of their lives to achieve success in the workplace.
c. ability to provide feedback to employees.
Herzberg's research indicated that employees are motivated by job content. Contemporary managers focus on _____________ by increasing the significance of the job, and even providing the employee with important feedback.
.

a. rotating the job

b. enriching the job

c. simplifying the job

d. reducing the responsibilities in the job
b. enriching the job
Douglas McGregor described two very different sets of managerial attitudes about employees, which he called:
.

a. the positive view and the negative view.

b. the macro perspective and the micro perspective.

c. Theory X and Theory Y.

d. individualism and collectivism.
c. Theory X and Theory Y.
According to Herzberg, a sense of achievement, earned recognition, and interest in the work itself were all:
.

a. important motivators.

b. hygiene factors.

c. ways for employees to meet their social needs.

d. consistent with his Theory X approach to motivation.
a. important motivators.
__________ is the degree to which a job requires doing a task with a visible outcome from beginning to end.
.

a. Task significance

b. Autonomous responsibility

c. Job specification

d. Task identity
d. Task identity
Probably the most controversial program enforced by the Equal Employment Opportunity Commission concerns:
.

a. mandatory retirement.

b. affirmative action.

c. equal pay reporting.

d. green card requirements for illegal aliens.
b. affirmative action.
Mario's business was growing at a steady rate, but he knew he could do better! In order to capture more business, he would have to hire a few more sales professionals to sell into new markets. As he pondered his staffing needs, his sister who worked in HR informed him that he needed to do a <i>job analysis</i> before hiring. Which of the following would be a logical part of a job analysis for a sales position?
.

a. Asking the current sales reps to create a log of their daily and weekly activities

b. Asking the HR specialist to create an online application for the position(s)

c. Training new recruits

d. Determining how many sales reps other companies typically have on staff
a. Asking the current sales reps to create a log of their daily and weekly activities
Which of the following statements about home-based work and telecommuting is most accurate?
.

a. Although home-based work may become very popular in the future, only a small percentage of workers currently work at home on a regular basis.

b. Telecommuting offers big advantages for many workers, but is likely to increase costs for employers significantly.

c. Home-based work tends to increase the productivity of almost all workers, since people tend to be more productive when they are comfortable and can work flexible hours.

d. Home-based work allows workers to choose their own hours and interrupt work for child care and other tasks, but this freedom and flexibility can create problems for some workers.
d. Home-based work allows workers to choose their own hours and interrupt work for child care and other tasks, but this freedom and flexibility can create problems for some workers.
The Creative Director at Image First Promotion Company got word yesterday that the firm lost the Hottie Potatee account. As its second best customer, the Director must quickly perform damage control and unfortunately dismiss two creative writers and one web development content provider. As he prepares to call each of them to his office and perform the dismissals, he decides to make one final call to the company HR manager to make certain that he is doing and saying the right things. The HR manager will <u>disagree</u> with which of the following statements?
.

a. He will offer each employee a three-month severance package, as long as they agree to sign a non-compete agreement for that time period.

b. He will be consistent in his remarks to the three employees.

c. He will create a story that their jobs are being eliminated due to new technology since revealing that the firm lost a major account could tarnish the image of the firm.

d. Assure each employee that they can count on him for future job references and that he will be honest with anyone inquiring as to why they were dismissed.
c. He will create a story that their jobs are being eliminated due to new technology since revealing that the firm lost a major account could tarnish the image of the firm.
One of the most important responsibilities for professionals in the human resources field is:
.

a. understanding the ethical perspective of each employee.

b. filing employee medical claims.

c. to always "right past wrongs."

d. staying current with employment-related legislation.
d. staying current with employment-related legislation.
Which of the following workers would be the best example of a contingent worker?
.

a. an assembly line worker who belongs to a union and has 17 years of seniority

b. an accountant hired to help during the busy tax season

c. an elementary school teacher who just received tenure

d. an electrical engineer who frequently travels out of the country to the various manufacturing facilities owned and operated by his firm
b. an accountant hired to help during the busy tax season
A firm would implement a policy of holding exit interviews if it wanted to:
.

a. find out why so many of its good employees were quitting.

b. implement a golden handshake policy.

c. allow immediate supervisors one more chance to convince retiring workers to stay on the job.

d. make sure workers who agreed to telecommute understood their new responsibilities.
a. find out why so many of its good employees were quitting.
Corporate managers who supervise, coach, and guide lower-level employees and serve as their organizational sponsors are called:
.

a. networkers.

b. role models.

c. mentors.

d. corporate guides.
c. mentors.
As an important step in the human resource selection process, which of the following will expedite the process of conducting background investigations and promises to get suitable results?
.

a. Hiring services such as LexisNexis to conduct criminal checks and driving records.

b. Dedicating one human resource expert to making personal calls and doing all the background checks.

c. Minimalizing the types of questions the company asks at this juncture.

d. If there is a need to skip one of the selection process steps, most companies have found that this one can be eliminated.
a. Hiring services such as LexisNexis to conduct criminal checks and driving records.
Which of the following is a challenge that is facing the human resource managers of today?
.

a. too many unemployed scientists and computer engineers

b. an increasing number of Gen Yers in the workforce

c. a shift in employee attitudes toward work

d. an increased demand for uniformity in benefits offered to employees
c. a shift in employee attitudes toward work
Almost overnight, several police persons, all members of the police force of the growing suburb of Mayberry called in sick. As the dispatcher took those calls - one right after the other, she speculated that there could be more to this story than she was hearing. In fact, she thought it might be related to the emotional banter she heard the night before in the locker room as several members of the force were leaving their shifts. The group was not happy with the recent changes in scheduling, the excessive over-time hours, and, management's reluctance to begin negotiations on a new benefits package. She heard one person saying, "It's time for a mental health day!" Although it is illegal for police to strike, they may be claiming to have _______.
.

a. Saturday nite fever

b. the blue flu

c. a lockout

d. a shutterbug
b. the blue flu
A labor dispute between the AFL-CIO and Gainesville Brewery is into its eighth month. The AFL-CIO has called on its membership and the general public to refuse to purchase Gainesville products. The AFL-CIO is calling for a:
.

a. general boycott.

b. secondary boycott.

c. primary boycott.

d. public boycott.
c. primary boycott.
The leadership of _____________ was instrumental in bringing about the merger between the American Federation of Labor and the Congress of Industrial Organizations in 1955.
.

a. George Meany

b. Terence K. Powderly

c. Ronald Reagan

d. Samuel Gompers
d. Samuel Gompers
A key difference between a mediator and an arbitrator is that:
.

a. a mediator is appointed by labor and management, while an arbitrator is appointed by the federal government under terms set forth in the Taft-Hartley Act.

b. a mediator is an unpaid volunteer, while an arbitrator is a paid professional.

c. an arbitrator can settle a labor-management dispute by rendering a binding decision, while a mediator can only make suggestions and encourage the two sides in a dispute to continue negotiating.

d. a mediator is a lawyer who represents either labor or management in a labor dispute, while an arbitrator is an impartial advisor who listens to both sides of the dispute and offers suggestions that help the two parties reach a mutually acceptable agreement.
c. an arbitrator can settle a labor-management dispute by rendering a binding decision, while a mediator can only make suggestions and encourage the two sides in a dispute to continue negotiating.
Closed shops were declared illegal by the:
.

a. Taft-Hartley Act.

b. Norris-LaGuardia Act.

c. National Labor Relations Board in 1929.

d. U.S. Supreme Court in 1946.
a. Taft-Hartley Act.
In a(n) _______, all of the members are skilled specialists in a particular trade.
.

a. ESOP

b. craft union

c. industrial union

d. trade federation
b. craft union
If management and union officials cannot resolve a grievance, a(n) _________ is asked to listen to the arguments of each side and to make a decision that both sides will have to comply with.
.

a. confirmer

b. counselor

c. arbitrator

d. mediator
c. arbitrator
The justification for dues or fees paid by nonunion members to the union in a(n) _________ shop is that the union represents all workers in collective bargaining, not just those who belong to the union.
.

a. closed

b. agency

c. fee simple

d. union
b. agency
During the first decade of the 21<sup>st</sup> century, the AFL-CIO saw its membership significantly decline when ___________________________________.
.

a. Seven of its member unions split to form a new union, the CtW [Change to Win].

b. Its large representation decided to merge with the manufacturers and craft unions.

c. Members looking for a better bargain with respect to membership dues elected to form independent unions.

d. The stronger member unions refused to acknowledge international member groups, and essentially voted them out of the union.
a. Seven of its member unions split to form a new union, the CtW [Change to Win].
Under a(n) ___________ shop agreement, workers must belong to the union before they are hired.
.

a. open

b. union

c. agency

d. closed
d. closed
The __________ was set up as a federation of many separate craft unions.
.

a. Knights of Labor

b. Committee of Industrial Organizations

c. League of Unions

d. American Federation of Labor (AFL)
d. American Federation of Labor (AFL)
The first federal minimum wage was established by the:
.

a. Fair Labor Standards Act.

b. Wagner Act.

c. Minimum Compensation Act.

d. Pay Equity Act.
a. Fair Labor Standards Act.
The Industrial Revolution was characterized by a(n):
.

a. increased emphasis on production, resulting in longer hours and less job security for most workers.

b. migration of manufacturing jobs from the Midwest and Northeast to the South as firms began locating in areas where labor costs were lower.

c. rapid improvement in the wages and working conditions of most workers, resulting in a decline in the need for labor unions.

d. movement away from scientific management, and a greater acceptance of the ideas of Herzberg and Maslow.
a. increased emphasis on production, resulting in longer hours and less job security for most workers.
Drug problems among workers is costing the U.S. economy upwards of ______ in lost work, health care costs, and even crime and accidents.
.

a. $100 million

b. $50 billion

c. $414 billion

d. $50 thousand
c. $414 billion
One strategy unions must adapt in order to grow in the future is to:
.

a. find ways to appeal to white-collar, female, and foreign-born workers.

b. find ways to prevent foreign companies from entering the U.S. market.

c. go back to the old methods of aggressive tactics and confrontation that were used successfully in the past.

d. emphasize recruiting efforts in the manufacturing sector of the economy.
a. find ways to appeal to white-collar, female, and foreign-born workers.
The _________ Act established the National Labor Relations Board.
.

a. Wagner

b. Taft-Hartley

c. Norris-LaGuardia

d. Fair Labor Standards
a. Wagner
Bob believes that management is treating him unfairly because of his efforts to organize a vote for union representation. Which organization should Bob contact to report his concerns?
.

a. Federal Board of Labor Rights

b. National Labor Relations Board

c. Federal Trade Commission

d. Federal Commission on Unfair Labor Practices
b. National Labor Relations Board
Mini-Case<br/><br/>The workers at Endrun Corporation are not affiliated with a union. Until recently, the workers felt they were well paid and treated fairly by the company, so they had little interest in seeking union representation. However, worker morale at Endrun has declined steadily since the board of directors fired the old CEO last year and replaced him with Ty Runt, a no-nonsense, autocratic manager with a reputation for cutting costs. As soon as he took over, Ty fired other members of the old top management team and replaced them with people who shared his views. Together, the new management team made a series of moves that did not sit well with Endrun's workers. First, they announced changes in work procedures designed to speed up the production line. Many workers complained that the new methods cut corners and were unsafe, but management refused to listen. A few months after changing work methods, the company told workers that it was reducing their health benefits. This led to even greater worker unrest. Finally, just a few weeks ago, workers received word that the wages of all production line employees would be cut by 6 percent. Many employees felt this was the last straw, especially since the company's board of directors recently approved big salary increases and more lucrative stock option plans for Ty and his management team. A spokesperson for the board explained that the raises were justified because of the management team's "outstanding efforts to reduce costs, increase productivity, and improve the company's profits."<br/><br/>Several disgruntled employees, led by Ima Striker and Boyd Cotter, now believe it is time to obtain union representation. Top managers at the company have hinted that workers who actively participate in the union campaign may be among the first workers laid off if the company decides to downsize. Ima and Boyd are not intimidated by these management threats. "I wish we didn't have to do this," Ima recently told many of her fellow workers at the plant. "But someone has to stop Ty Runt and his team from ruining our jobs."<br/>&#160;<br/>After gaining union representation, any workers with complaints regarding promotions, layoffs, and job assignments will file a(n) ________ with their shop steward.
.

a. grievance

b. arbitration request

c. injunction

d. yellow-dog contract
a. grievance
The steps Ima, Boyd and their fellow workers must take to get the union legally recognized as the authorized bargaining agent are parts of the __________ process.
.

a. accreditation

b. arbitration

c. certification

d. collective bargaining
c. certification
The Taft-Hartley Act:
.

a. established the first minimum wage.

b. allowed individual states to pass right-to-work laws prohibiting compulsory union membership.

c. required management to bargain in good faith with union representatives.

d. set up the process by which unions could be recognized as the exclusive bargaining agents for a group of workers.
b. allowed individual states to pass right-to-work laws prohibiting compulsory union membership.
The significant increase in consumer demand following World War II marked the beginning of the:
.

a. production era.

b. selling era.

c. marketing concept era.

d. customer relationship era.
c. marketing concept era.
Understanding consumers in marketing is considered so important that a whole area of marketing called _____________________ emerged.
.

a. customer programming

b. consumer behavior

c. individual benchmarking

d. customers competency
b. consumer behavior
A consumer's decision-making process is influenced by his/her _________, consisting of those people who help shape the consumer's beliefs, attitudes, values or behavior.
.

a. reference group

b. focus group

c. target audience

d. social class
a. reference group
Which of the following describes individuals that want goods and services for personal consumption and have the resources to buy them?
.

a. secondary market

b. business-to-business market

c. market segmentation

d. consumer market
d. consumer market
A comparison of the marketing concept and customer relationship management indicates that customer relationship management:
.

a. and the marketing concept are in fact identical.

b. attempts to improve profits by keeping quality high, while the marketing concept attempts to improve profits by a careful design of the promotional mix.

c. turns the marketing concept upside down. The marketing concept emphasized that marketing was the most important function performed by a firm, but customer relationship management views management to be the most important function.

d. extends the marketing concept by calling for the firm to learn more about its customers so that it not only satisfies them, but exceeds their expectations over time.
d. extends the marketing concept by calling for the firm to learn more about its customers so that it not only satisfies them, but exceeds their expectations over time.
People with unsatisfied wants and needs who have both the ability and the willingness to buy are:
.

a. a market.

b. stockholders.

c. a profit center.

d. a marketing mix.
a. a market.
A ________ marketing strategy develops products and promotions designed to please large groups of people.
.

a. volume

b. mass

c. relationship

d. value
b. mass
____________ is the process of identifying factors that can affect marketing success.
.

a. Environmental scanning

b. Target marketing

c. Niche marketing

d. Segmentation analysis
a. Environmental scanning
Firms that adopt a relationship marketing strategy attempt to:
.

a. develop products that meet the specific requirements of individual customers.

b. maximize their market share by designing products that appeal to large numbers of customers.

c. develop their promotional efforts utilizing mass media such as television, newspapers and radio in order to relate to a large audience.

d. maximize market share by controlling production costs and maintaining low prices.
a. develop products that meet the specific requirements of individual customers.
When Callie wants to obtain information to research changes in her market or determine what her customers are likely to want in the future, she relies on the articles and data available in trade journals, feedback from surveys, and personal interviews of her customers. Which of the following statements about Callie's sources of information is most accurate?
.

a. Callie is relying entirely on primary data for her research needs.

b. Callie is relying entirely on secondary data for her research.

c. The surveys and personal observations provide primary data, while the journals provide secondary data.

d. The surveys and personal observations provide secondary data, while the journals provide primary data.
c. The surveys and personal observations provide primary data, while the journals provide secondary data.
Which of the following marketing eras refers to the time period from our country's first settlers through the early 1900s?
.

a. production era

b. selling era

c. marketing era

d. customer relationship era
a. production era
She subscribes to several journals that cover trends and report on research findings related to the health club business. She has found that these journals provide her with an inexpensive source of useful information.<br/>&#160;<br/>When Callie developed a detailed description of her ideas for a health club and asked for feedback from women about the proposal, she was engaging in:
.

a. test marketing.

b. psychographic segmentation.

c. concept testing.

d. prototype analysis.
c. concept testing.
Which of the following is most consistent with a relationship marketing strategy?
.

a. the development of a Web site that seeks customer feedback and allows customers to communicate with each other

b. the creation of a national advertising campaign using radio and television to increase market share

c. designing a promotional campaign to increase cooperation among the firm's suppliers

d. distributing goods through limited service discount stores
a. the development of a Web site that seeks customer feedback and allows customers to communicate with each other
The goal of __________ is to keep individual customers over time by offering them new products that exactly meet their requirements.
.

a. niche marketing

b. mass marketing

c. relationship marketing

d. segment marketing
c. relationship marketing
The Bay Street Bakery (BSB) has a respected following. When it moved the business to a famous resort area, it took a big risk; however, the owners were confident that its unique European style cookies and pastries would win customer raves. And they were right! Fortunately, one of the members of the family business was convinced that BSB needed to stay in touch with its loyal customers. When customers visited the bakery, the business collected names and addresses in order to send messages about promotions and coupons to valued customers. Marketing professionals refer to this strategy as:
.

a. niche marketing.

b. production management.

c. customer relationship management.

d. sales management.
c. customer relationship management.
For the past 25 years, Sam's family ran movie theatres in a mid-sized metropolitan area. Four theatres were located in three different cities, all within 15-20 miles of each other. Usually, the theatres featured the latest movies, and on the same schedule. Although the business kept its theatres on a remodeling schedule, the past few years, there were significant declines in ticket sales. After reading the segment, "Let's Go to the Movies," in the Spotlight on Small Business box, you would suggest to Sam that he:
.

a. Focus on only one of the four Ps at a time when making marketing strategy decisions.

b. Change his business model and begin competing with Netflix and Blockbuster because people who like movies just do not care for the big screen any longer.

c. Differentiate the offering by transforming at least one of the screens into a space where patrons can experience dinner and a movie.

d. Close 50% of the locations, and focus on making the remaining five theatres quieter so that it will accommodate senior citizens.
c. Differentiate the offering by transforming at least one of the screens into a space where patrons can experience dinner and a movie.
Marketers define a ________ as any physical good, service, or idea that satisfies a want or need.
.

a. product

b. copyright

c. prototype

d. concept
a. product
Holly is a sophomore in college considering a degree in marketing. She has asked several friends for advice and their comments are listed below. Which of these comments is the most accurate and likely to help Holly?
.

a. Marketing offers business students a wide array of career options.

b. Majoring in marketing rules out a meaningful career with a nonprofit organization.

c. You should major in marketing only if you want to work in advertising or personal selling.

d. Marketing is a career that offers stability, good pay and ample employment opportunities. Marketing activities today are essentially the same as they were several decades ago.
a. Marketing offers business students a wide array of career options.
According to the _________ concept, a firm must (1) find out what customers want and provide it, (2) make sure everyone in the organization has customer satisfaction as an objective, and (3) provide goods and services that will earn a profit.
.

a. stakeholder relationship

b. consumerism

c. marketing

d. demand-side
c. marketing
The last step in the marketing process often includes:
.

a. collecting the cash from sales to consumers.

b. developing a written report to summarize the results of the period's marketing activities.

c. deciding the best way to distribute the product.

d. building relationships with customers.
d. building relationships with customers.
The best product development strategy for most firms is to:
.

a. develop a small number of products that achieve market success and stick with them, because constantly changing old products (or introducing new ones) can confuse and frustrate customers.

b. maintain one product line while adding regularly to that product line over time to sustain customer interest.

c. constantly monitor consumer wants and needs and be willing to develop new products and adapt policies and services as those consumer needs begin to change.

d. focus on the actual product or service and don't worry too much about factors such as image, price, and service.
c. constantly monitor consumer wants and needs and be willing to develop new products and adapt policies and services as those consumer needs begin to change.
For small businesses, product differentiation:
.

a. is more difficult than it is for larger firms because of the high cost of product research and development.

b. usually concentrates on the pricing component of the total product offer.

c. can be an important strategy to gain market share.

d. is less important than it is for big firms with multiple product lines.
c. can be an important strategy to gain market share.
Which of the following statements about non-price competition is most accurate?
.

a. While still important, non-price competition is becoming less critical as a result of the Internet.

b. Marketers often rely on non-price differences in their competitive strategy to enhance a relatively homogeneous product.

c. Non-price competition is much more important to large firms than it is to small firms.

d. As microeconomic theory suggests, firms have found that non-price competition plays a secondary role that supplements the more important competition based on price.
b. Marketers often rely on non-price differences in their competitive strategy to enhance a relatively homogeneous product.
Sears sells batteries under its own Diehard brand name even though another company actually produces these batteries. This is an example of a:
.

a. knockoff brand.

b. generic brand.

c. dealer (private) brand.

d. brand association.
c. dealer (private) brand.
Green Giant Green Beans, Chevy Corvette, Coca Cola, Dole Pineapple, and Peter Pan Peanut Butter are all examples of:
.

a. private brands.

b. wholesaler brands.

c. manufacturers' brands.

d. registered generic brands.
c. manufacturers' brands.
Business sponsorship of events, such as the Winston-Salem stock car races or NASCAR's Nextel Cup Series, is intended to increase:
.

a. brand awareness.

b. the quality of the event.

c. the promotional budget.

d. the availability of knockoff brands.
a. brand awareness.
Many supermarkets carry plain packages that only identify the name of the product that is inside. For example, a label may read simply "peaches" or "green beans." These goods represent:
.

a. private labels.

b. manufacturers' brands.

c. generic goods.

d. universal code branding.
c. generic goods.
__________ consists of major capital equipment such as new factories and heavy machinery.
.

a. Accessory goods

b. Specialty goods

c. Installations

d. Shopping goods
c. Installations
Some businesses use nostalgic ads to rekindle the memories and emotions of consumers to an earlier time and place. This technique of linking a brand name to a pleasant memory or favorable image is the goal of brand:
.

a. association.

b. tie-ins.

c. insistence.

d. preference.
a. association.
The __________ on packages were intended to improve inventory control for businesses.
.

a. stars and stripes

b. Universal Product Codes

c. lightweight adhesives

d. Unit Standard Inventory bars
b. Universal Product Codes
__________ warehouses are used to gather and redistribute products.
.

a. Storage

b. Distribution

c. Wholesale

d. Merchandising
b. Distribution
Mini-Case<br/><br/>"We've got a number of important issues to discuss today," began Dee Stribyute as she opened the weekly marketing manager's meeting for Lite Bite Foods. Lite Bite is a producer of low fat, low calorie snack foods. The other managers attending the meeting were her two top assistants, Mark Etter and Rhea Taylor.<br/><br/>"First, sales were hurt last year when we had to recall our almond chocolate bars because of concerns about contaminated ingredients. We've got our work cut out for us to recover from that setback. Many stores quit carrying our products, and even the ones that continued to do so put less emphasis on displaying and promoting them. We've got to get our products into as many stores as possible. Consumers shouldn't have to go all over town trying to find our snacks. We also need to make sure that our products are displayed and promoted in a way that attracts attention." Dee looked at her assistants, and saw that they seemed ready to make some proposals. However, she decided to get another important issue out on the table before stopping to discuss solutions, so she continued with her comments. "The other big concern is the cost of moving our goods. Distribution costs are a major part of the overall cost of selling our goods. What can we do to make the flow of products from our kitchens to our ultimate consumers more efficient?" Having laid out her concerns, Dee sat down at the head of the table, saying to her assistants, "O.K. guys, I'm ready for suggestions."<br/>&#160;<br/>Currently, Lite Bite uses a lot of intermediaries to help distribute its products. Collectively, the organizations that participate in getting finished goods from Lite Bite to the ultimate consumers of its products are all part of the:
.

a. marketing mix.

b. franchise system.

c. channel of distribution.

d. marketing network.
c. channel of distribution.
Those organizations that assist in the movement of goods and services from producer to industrial and consumer users are known as:
.

a. directed marketers.

b. distributive specialists.

c. marketing intermediaries.

d. supplementary marketers.
c. marketing intermediaries.
In a(n) ____________ distribution system all of the organizations in the channel of distribution are owned by one firm.
.

a. administered

b. contractual

c. supply-based

d. corporate
d. corporate
In administered distribution systems, retailers:
.

a. are reluctant to cooperate because they must perform many marketing functions for an uncertain payment.

b. receive a great deal of marketing help from producers.

c. are really subsidiaries of a manufacturer.

d. sign a contract agreeing to cooperate with wholesalers in the channel of distribution.
b. receive a great deal of marketing help from producers.
Mini-Case<br/><br/>"We've got a number of important issues to discuss today," began Dee Stribyute as she opened the weekly marketing manager's meeting for Lite Bite Foods. Lite Bite is a producer of low fat, low calorie snack foods. The other managers attending the meeting were her two top assistants, Mark Etter and Rhea Taylor.<br/><br/>"First, sales were hurt last year when we had to recall our almond chocolate bars because of concerns about contaminated ingredients. We've got our work cut out for us to recover from that setback. Many stores quit carrying our products, and even the ones that continued to do so put less emphasis on displaying and promoting them. We've got to get our products into as many stores as possible. Consumers shouldn't have to go all over town trying to find our snacks. We also need to make sure that our products are displayed and promoted in a way that attracts attention." Dee looked at her assistants, and saw that they seemed ready to make some proposals. However, she decided to get another important issue out on the table before stopping to discuss solutions, so she continued with her comments. "The other big concern is the cost of moving our goods. Distribution costs are a major part of the overall cost of selling our goods. What can we do to make the flow of products from our kitchens to our ultimate consumers more efficient?" Having laid out her concerns, Dee sat down at the head of the table, saying to her assistants, "O.K. guys, I'm ready for suggestions."<br/>&#160;<br/>Dee's comments about the need to get Lite Bite products into additional retail outlets suggests the company wants to use a(n):
.

a. intensive distribution strategy.

b. multilevel marketing strategy.

c. intermodal distribution network.

d. selective distribution strategy.
a. intensive distribution strategy.
When marketing intermediaries perform the steps necessary to transfer ownership from one party to another, they are providing _________ utility.
.

a. marginal

b. title

c. possession

d. registration
c. possession
_________ utility adds value to goods by having them available where people want them.
.

a. Spatial

b. Location specific

c. Place

d. Geographic
c. Place
The most likely type of utility that's provided by convenience stores is:
.

a. form.

b. place.

c. information.

d. service.
b. place.
Items such as snow skis, lawnmowers, and other highly seasonal items are often held in ___________ warehouses during the months they are not in demand.
.

a. seasonal

b. distribution

c. set aside

d. storage
d. storage
Mini-Case<br/><br/>The Xer-Wise Corporation manufactures and markets high quality home exercise equipment. The firm has just developed a new piece of equipment that top executives believe will be a big seller if promoted ly. The new product uses a system of adjustable weights that can be arranged in various ways to allow the user to perform exercises that tone all major muscle groups. Additionally, unlike other strength building machines, this equipment also incorporates a recumbent bicycle to provide a complete aerobic workout. The entire piece of equipment is easy to assemble, and when not in use it can be folded into a compact unit that is easy to store. A group of fitness experts have tested the equipment and have provided rave reviews. Company executives believe that this product, called the MuscleMaster, will appeal to busy young adults living in relatively small apartments. Melody Fitt and Tom Trym have been assigned the responsibility of developing a promotion mix for this product. The team of Fitt and Trym is convinced that they can develop a successful promotion mix for this outstanding product.<br/>&#160;<br/>Tom and Melody are considering the extensive use of ads in fitness magazines and a direct mail campaign targeted at people who have bought other products made by Xer-Wise. Since these messages are geared directly to customers, it is clear that Tom and Melody want to implement a _________ strategy.
.

a. push

b. pull

c. placement

d. stretch
b. pull
When managing the promotion mix, marketers are utilizing technology to deliver important information directly to the customer. For example, during the spring planting season, Home Depot&#153; and Lowes&#153; added bar codes to plants. When scanned with a mobile app (using one's smart phone applications), customers could make better buying decisions. The bar code offered information on planting time, watering schedule, sun vs. shade plants, and other pertinent tips on each plant. Home Depot even ran a bar-code commercial, to let its customers know how it was using technology to assist them with their spring planting decisions. Whether using new promotional methods or traditional promotional methods, Home Depot:
.

a. Utilized pull strategy because it directed its campaign to the stores where the products are sold.

b. Utilized push strategy because it directed its messages to consumers, permitting them to subscribe to the pick economy.

c. Utilized pull strategy because it directed its messages to consumers.

d. Utilized push strategy because it directed its messages to its stores that were already equipped with bar code technology.
c. Utilized pull strategy because it directed its messages to consumers.
The combination of advertising, personal selling, public relations, and sales promotion activities traditionally used by an organization represents its:
.

a. marketing communications system.

b. marketing mix.

c. public relations package.

d. promotion mix.
d. promotion mix.
After completing his sales presentation, Jerald's client expressed her concerns and questioned some of the details of the sales proposal. An effective salesperson would:
.

a. downplay these objections and push to close the sale as quickly as possible to avoid the endless questions that some customers ask.

b. address her concerns and develop a better relationship.

c. consider revising the presentation so that next time customer concerns and objections can be avoided.

d. bring in the top executives of the company to close the sale.
b. address her concerns and develop a better relationship.
When marketing to consumers in the global population, it's important for companies to remember that promoting products:
.

a. is easy and profitable if they are well-known brands.

b. can be accomplished using a global approach since consumers are more alike than most people think.

c. is best done by using personal selling and product sampling.

d. calls for attention to cultural differences and possible translation problems.
d. calls for attention to cultural differences and possible translation problems.
Companies that adopt a pull strategy target their promotional efforts toward:
.

a. consumers.

b. retailers.

c. wholesalers.

d. manufacturers.
a. consumers.
The goal of __________ is to inform and remind people in a target market about specific products, eventually persuading them to participate in an exchange.
.

a. promotion

b. market research

c. market segmentation

d. marketing loyalty
a. promotion
Bonnie faces the challenge of developing the promotion mix for a new business. Given the uniqueness of the new products and a very limited budget, Bonnie confronts a creditability problem. She realizes that the promotional messages of an unknown firm may be met with skepticism. Bonnie should consider:
.

a. publicity to help create a positive image for her firm and its products.

b. the extensive use of persuasive advertising.

c. emphasizing personal selling rather than public relations.

d. changing jobs because this situation is hopeless.
a. publicity to help create a positive image for her firm and its products.
In the seven step B2B selling process, the selection of potential customers is known as:
.

a. prospecting.

b. synchronizing.

c. articulating.

d. qualifying.
d. qualifying.
Professor Beenthere shared with his students the wonderful experience he had at a local Asian restaurant. He described the location in relation to campus and encouraged his students to give it a try. The professor's comments represent:
.

a. word-of-mouth promotion.

b. public relations.

c. academic sampling.

d. viral promotion.
a. word-of-mouth promotion.
Last year, New Era Cap Company (Buffalo, NY) celebrated its 90<sup>th</sup> anniversary in business as a privately held company that makes a variety of hats and one of two suppliers of official MLB (major league baseball) caps. According to the <i>New York Times</i>, the company invited "90 influential people to create one-of-a-kind caps to be auctioned off for charity." As a student of marketing, you would categorize this promotional event as a form of ____________.
.

a. viral marketing

b. blogging

c. advertising

d. sales promotion.
d. sales promotion.
The Hispanic and Asian populations in the U.S. are growing rapidly. To effectively reach these groups marketers should:
.

a. maintain a consistent approach for all consumers regardless of differences in national origin.

b. use advertising as a way of integrating immigrants into the U.S. culture.

c. develop custom-designed promotions for all viable market opportunities.

d. avoid using newspapers and radio advertising and concentrate instead on television and the Internet.
c. develop custom-designed promotions for all viable market opportunities.
Bethany just finished making a sales presentation to a major prospect. In the next step of the selling process, Bethany will likely be:
.

a. processing the customer's order.

b. closing the sale, by asking the customer to make a commitment.

c. answering customer questions and dealing with objections.

d. setting an appointment for the customer to meet with her boss.
c. answering customer questions and dealing with objections.
The distribution method for audio and video programs via the Internet that lets users subscribe to a number of files or feeds is called a:
.

a. webcast.

b. podcast.

c. blog.

d. filecast.
b. podcast.
Mini-Case<br/><br/>The Xer-Wise Corporation manufactures and markets high quality home exercise equipment. The firm has just developed a new piece of equipment that top executives believe will be a big seller if promoted ly. The new product uses a system of adjustable weights that can be arranged in various ways to allow the user to perform exercises that tone all major muscle groups. Additionally, unlike other strength building machines, this equipment also incorporates a recumbent bicycle to provide a complete aerobic workout. The entire piece of equipment is easy to assemble, and when not in use it can be folded into a compact unit that is easy to store. A group of fitness experts have tested the equipment and have provided rave reviews. Company executives believe that this product, called the MuscleMaster, will appeal to busy young adults living in relatively small apartments. Melody Fitt and Tom Trym have been assigned the responsibility of developing a promotion mix for this product. The team of Fitt and Trym is convinced that they can develop a successful promotion mix for this outstanding product.<br/>&#160;<br/>Tom and Melody have decided to work together to write a news release that describes the benefits of MuscleMaster and cites the rave reviews of the fitness experts who have already tried the equipment. They intend to send the release to a list of columnists who write in fitness magazines or have health and fitness columns in newspapers, hoping that some of these writers will include information about the MuscleMaster in their articles. Tom and Melody hope to utilize:
.

a. publicity.

b. a push strategy.

c. viral marketing.

d. swag promotion.
a. publicity.
The management of GamesPeople designed a comprehensive strategy that unifies advertising, personal selling, public relations and sales promotion activities creating a consistent message. This effort to promote a positive brand image represents a(n) ________ program.
.

a. global marketing

b. interactive promotion

c. integrated marketing communication

d. unified segmentation
c. integrated marketing communication
TV programs devoted exclusively to promoting goods and services are called:
.

a. testimonials.

b. infomercials.

c. interactive TV.

d. online computer advertising.
b. infomercials.
Which of the following represents the primary purpose of a firm using institutional advertising?
.

a. The desire to create a positive image for the firm

b. Getting full coverage of local markets

c. High visibility of a specifically targeted message

d. This type of advertising reduces cost
a. The desire to create a positive image for the firm
One of the distinct differences between ______________ and other forms of advertising is the fact that the medium used allows for a dialogue exchange of information between buyers and sellers, instead of a monologue type approach.
.

a. product placement

b. direct mail

c. interactive promotion

d. infomercials
c. interactive promotion
________ refers to the face-to-face presentation and promotion of goods and services. This also includes searching for prospects and providing follow-up services.
.

a. Word-of-mouth promotion

b. Personal selling

c. Public relations

d. Internal marketing
b. Personal selling
Brianna is a bookkeeper for Monograms, Limited. She takes the firm's transactions and records them in a record book or computer program referred to as:
.

a. A credit account.

b. An asset database.

c. A journal.

d. A debit program.
c. A journal.
The Balance Sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000. Which of the following statements is ?
.

a. Owner's Equity equals $182,000.

b. Current Assets are worth $32,000.

c. Net Income for the period is $32,000.

d. Owner's Equity equals $32,000.
b. Current Assets are worth $32,000.
During a period of rising prices, using FIFO (first in, first out) inventory valuation method will result in ________ net income figures than would LIFO (last in, first out).
.

a. higher

b. lower

c. the same

d. less accurate
a. higher
While reviewing the books at his firm, Chad Cooper noticed discrepancies between how the firm recorded revenues last year and how it elected to record revenues during the recent quarter of the current year. As a recent business graduate, Chad felt confident that the changes needed clarification. To get another opinion, Chad suggested to the company's controller that the firm solicit ______________.
.

a. the assistance of the Government Accounting Standards Board

b. the services of a certified internal auditor

c. the services of a senior executive at the IRS

d. the services of an independent auditor
d. the services of an independent auditor
Cindy is concerned because during the past four months her company has experienced difficulty in paying its bills on time. She knows if this continues, the firm will have difficulties in accomplishing its goals. Cindy is concerned with:
.

a. asset disbursement.

b. cash flow.

c. profit and loss.

d. inventory valuation.
b. cash flow.
Leverage ratios indicate the extent to which ________ has been used to fund a business's operations.
.

a. debt

b. equity

c. owner invested capital

d. profit
a. debt
Today's computerized accounting programs are:
.

a. Very helpful for small business owners who lack strong accounting support within their companies.

b. Too expensive and complicated for most small businesses.

c. A poor investment for small start-up companies due to the fact that these programs are seldom needed unless the firm is considered a mid-sized to large company.

d. So sophisticated that they can make most financial decisions without the aid of an accountant.
a. Very helpful for small business owners who lack strong accounting support within their companies.
Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to ____________."
.

a. Managers within the firm, exclusively

b. Marketing research firms for pricing insights

c. Primarily the IRS and other government agencies that regulate the firm

d. Managers, owners, creditors, employees, and the government
d. Managers, owners, creditors, employees, and the government
In order to understand if the results of ratio calculations indicate a financially strong company, the results:
.

a. Should be compared to other firms in the same industry.

b. Are compared to same size firms in the same geographic region of the country.

c. Are compared to the norms established by generally accepted accounting principles.

d. Are compared to the largest firms in the country.
a. Should be compared to other firms in the same industry.
Company resources that are purchased with the intention that they will convert to cash within one year are:
.

a. Fixed assets

b. Current liabilities

c. Current assets

d. Owners' equity
c. Current assets
Stockholders of the Sasha Deal Company are concerned about irregularities in the firm's accounting system. One approach to identify problems in the records of the company would be to have a(n) ________ performed.
.

a. internal audit

b. independent audit

c. unofficial audit

d. GAAP analysis
b. independent audit
The __________ is a six-step procedure that results in the preparation and analysis of the major financial statements.
.

a. double-entry method

b. financial management process

c. financial performance appraisal

d. accounting cycle
d. accounting cycle
Resources that a firm owns are called:
.

a. Revenues.

b. Assets.

c. Equities.

d. Credits.
b. Assets.
One of the key financial statements prepared in the fifth step of the accounting cycle is:
.

a. general journal.

b. statement of cash flows.

c. asset summary.

d. social audit.
b. statement of cash flows.
Miko is preparing her homework for her accounting class. She is uncertain as to the proper handling of patents and copyrights on a firm's financial statements. Which of the following is ?
.

a. Patents and copyrights are included with the firm's intangible assets on the balance sheet.

b. Patents and copyrights are included with the firm's long-term liabilities on the balance sheet.

c. Patents and copyrights are included with the firm's cost of goods sold on the income statement.

d. Patents and copyrights are included with the firm's fixed assets on the balance sheet.
a. Patents and copyrights are included with the firm's intangible assets on the balance sheet.
A(n) __________ provides accounting services to individuals or firms on a fee basis.
.

a. contract accountant

b. account agent

c. public accountant

d. independent accountant
c. public accountant
Depreciation is a systematic write-off of the cost of a tangible asset that is listed on __________.
.

a. The Statement of Cash Flows

b. The Balance Sheet

c. The Income Statement

d. The Statement of Retained Earnings
c. The Income Statement
The top managers of Highbrow Bookstores want to indicate to the firm's shareholders how effectively they have managed the company. Perhaps the most meaningful way to do this would be by reporting strong:
.

a. liquidity ratios.

b. leverage ratios.

c. activity ratios.

d. profitability ratios.
d. profitability ratios.
A(n) ___________ is an evaluation and unbiased opinion of the accuracy of a firm's financial statements.
.

a. internal audit

b. annual report

c. independent audit

d. certified audit
c. independent audit
Charging interest on past due customer accounts reflects that:
.

a. credit sales cost more to manage than they are worth.

b. credit customers receive preferential treatment.

c. money has a time value.

d. government regulations protect customers who are late in making payments.
c. money has a time value.
Energy-wise Builders, Inc, a leader in residential housing, recently negotiated a financing arrangement with First Pennsylvania Bank. The short-term funding agreement guarantees a specified amount of funds would be made available upon Energy-wise's request. This arrangement represents a:
.

a. line of credit.

b. pledging agreement.

c. revolving credit agreement.

d. contingency reserve.
c. revolving credit agreement.
Arborview Plant Science Company has invented a drought resistant grass seed that only needs watering three times each year. In order to expand distribution world wide, the company whose product produces lush green foliage needs serious funding. The handful of seed scientists that own the company are seeking ___________, but understand that they will relinquish a sizeable share of ownership in order to obtain the funds.
.

a. debenture capital

b. international line of credit

c. leverage

d. venture capital
d. venture capital
__________ refers to the strategy of using borrowed funds to increase the rate of return for stockholders.
.

a. Leverage

b. Retained earnings

c. Factoring

d. Pledging
a. Leverage
A loan backed by collateral represents a(n):
.

a. bond trust.

b. debenture bond.

c. pledging factor.

d. secured loan.
d. secured loan.
Mini-Case<br/><br/>Tishian's Funeral Home has been in business for over eighty years. Throughout its history, the firm has been a family-run operation. Today, the business is managed by Mort Tishian, a grandson of the founder. Unfortunately, Mort Tishian's tenure has been plagued with problems neither his father nor grandfather before him experienced. The reason is simple: the funeral business is undergoing rapid change. Small, family-owned funeral homes are losing ground to a new type of competitor, a large national network service that resembles a franchise system. More and more families "in their time of need" are choosing the new, highly promoted competitors instead of the traditional small family-operated funeral homes.<br/><br/>This trend has required a response from organizations like Tishian's Funeral Home. Bigger and better facilities are needed to remain competitive. All of this puts more pressure on the family-owners to be more active in the financial side of the business. Mort summed it up best when he said, "Grandpa told people, 'you pay me when you can, I ain't goin' nowheres.'" His creditors did the same with him. Today, it's a different game. Cash flow is key, and obtaining funds is no simple task. Additionally, creditors want their money now, not later. Banks are also more demanding. "Heck, Grandpa knew all the bankers he dealt with personally. I see new faces every time I go to the bank. If things don't get better, I suspect after eighty years of service, Tishian's Funeral Home will have its own funeral."<br/>&#160;<br/>To raise the funds for the major improvements needed at the funeral home, Mort has talked to two investors about incorporating his business and selling them shares of stock in the company. Mort is considering the use of:
.

a. debt financing.

b. commercial paper.

c. equity financing.

d. revolving credit.
c. equity financing.
The budget that estimates a firm's projected cash inflows and outflows, as well as cash shortages or surpluses during a given time period is called the ________ budget.
.

a. capital

b. operating

c. cash

d. monetary
c. cash
One of the challenges of effective financial management is:
.

a. to have sufficient cash on hand without compromising the firm's investment potential.

b. ensuring the satisfaction of each of the stakeholder groups.

c. working within the strict regulations of the Financial Accounting Standards Board (FASB).

d. providing the financial data in a timely manner for management consultants to improve decision making.
a. to have sufficient cash on hand without compromising the firm's investment potential.
If a firm sells shares of stock, it is financing with _______.
.

a. debt

b. liabilities

c. spectator capital

d. equity
d. equity
Akiko realizes the importance of developing a ________ for her interior design business. Akiko understands the importance of appropriately allocating resources in order to achieve the goals of her firm.
.

a. market prediction

b. financial forecast

c. budget

d. cash flow analysis
c. budget
When Preferred Pet Care Inc, a mobile veterinary care company, first started operations, it extended three months of credit to customers. It soon began to experience a cash flow problem. A finance professional was hired to:
.

a. manage accounts receivable

b. manage accounts payable

c. develop tax strategies

d. audit the company ledgers
a. manage accounts receivable
The first step in the financial planning process is:
.

a. forecasting financial needs.

b. preparing financial statements.

c. developing budgets.

d. establishing financial control.
a. forecasting financial needs.
Which of the following ly identifies areas of authority and responsibility for a chief financial officer (CFO)?
.

a. Accounting and finance

b. Marketing and finance

c. Production and accounting

d. Finance and research and development
a. Accounting and finance
The owners of Preferred Pet Care, Inc., a mobile pet care company, have approached you about obtaining long-term financing. They must choose between debt financing and equity financing. Which of the following statements reflects accurate information that you share with this company?
.

a. The sale of stock (equity financing) will result in a greater pool of funds. Debt financing is less risky and increases leverage, but it seldom results in the owners securing the total amount of funds needed.

b. The sale of bonds is more risky because they always require collateral and an interest rate that exceeds the cost of capital.

c. The interest paid to banks and bondholders is tax deductible.

d. Equity financing usually comes with a lower cost of capital.
c. The interest paid to banks and bondholders is tax deductible.
Virginia Supply offers their customers trade credit with terms 2/15 net 30. This implies that:
.

a. Virginia's customers have very little incentive to pay within the discount period.

b. paying within 30 days will let a customer deduct 15% off the invoice price.

c. most customers will pay their bill within 2 days in order to take the maximum discount.

d. the annual financing cost of failing to pay within 15 days is about 48%.
d. the annual financing cost of failing to pay within 15 days is about 48%.
Which of the following commonly results in the financial failure of a firm?
.

a. Diversification

b. Undercapitalization

c. Control of expenses

d. Management of cash flows
b. Undercapitalization
Reality Films, Inc. is a very profitable company whose stock has appreciated in market value during the past ten years. Even though the firm was established several years ago, it does not pay its stockholders dividends. Reality Films reinvests its earnings. Which of the following statements might best reflect the sentiments of its chief financial officer (CFO)?
.

a. There is no purpose in paying dividends to stockholders when it is not required by law. After all, dividends are not tax deductible!

b. Stockholders receive interest payments twice each year. They do not receive dividends.

c. Retained earnings are an important source of equity funds for the company. Reinvestment of earnings helps to lower the overall cost of capital.

d. Retained earnings increase a firm's cost of capital. The higher the cost of capital, the higher the rate of return to investors.
c. Retained earnings are an important source of equity funds for the company. Reinvestment of earnings helps to lower the overall cost of capital.
Mort Tishian feels it's necessary to predict revenues, costs, and expenses on a six-month basis. "It's the only way you get an idea of what to expect," explains Mort. In order to obtain these predictions, Mort needs to develop a(n):
.

a. cash-basis accounting system.

b. short-term forecast.

c. capital budget.

d. econometric model.
b. short-term forecast.
Mort approached the chief lending officer at First Virginia Bank about obtaining a $75,000 loan. The banker said she would approve the loan provided that the funeral home's building was pledged as collateral. The banker was offering a(n):
.

a. trade credit agreement.

b. institutional loan.

c. secured loan.

d. revolving credit agreement.
c. secured loan.
Liberty Electronics wants to predict how much money it can make this coming year. Liberty would benefit from developing a:
.

a. master budget.

b. consolidated income statement.

c. short-term forecast.

d. statement of cash flows.
c. short-term forecast.
___________ are the firm's after tax profits that are distributed to stockholders.
.

a. Equity capital

b. Interest payments

c. Dividends

d. Retained earnings
c. Dividends
What agency sets the margin rates for purchasing stock in the U.S.?
.

a. The high commissioners of the Securities and Exchange Commission

b. The board of governors of the Federal Reserve System

c. The Securities Division of the Treasury Department

d. The Federal Trade Commission on Exchange Markets
b. The board of governors of the Federal Reserve System
During Ben's lunch break, he logged on to his computer to find the mutual fund he wanted to buy. As he made his way around several websites, he realized that the NAV (net asset value) quoted was yesterday's close. His shares would be purchased tomorrow, with today's closing price. Looking over his shoulder, one of his coworkers suggested that he look into _________ because they are similar to mutual funds, but could be traded during the entire trading day, just like stocks.
.

a. Index funds

b. Reality funds

c. Exchange traded funds

d. Barter funds
c. Exchange traded funds
Maureen owns 20% of the common stock of the Queen Bean Corporation. The company announced plans to offer an additional 10,000 shares of common stock for sale. If Maureen exercises her preemptive rights, Queen Bean must offer her the opportunity to purchase:
.

a. 8,000 shares.

b. 2,000 shares.

c. as many of the new shares as the investor is willing and able to buy.

d. 20% of the outstanding preferred stock.
b. 2,000 shares.
Which of the following terms best describes the relationship between the New York Stock Exchange and the NASDAQ?
c. Competitive
Which of the following situations would be considered insider trading?
.

a. You open the morning paper and read that Sun Microsystems has a new CEO, who plans to bring in his own team. You decide to call your broker and buy shares of Sun Microsystems.

b. Your Uncle Jerry works for Microsoft and sends you a news release put out by the company that talks about the acquisition of a Chinese company. You believe this will significantly boost Microsoft revenues so you buy 200 shares through an online service.

c. You call your stockbroker and ask him to buy 500 shares of your company, Best Dressed Computers, Inc., because you just heard from the CEO's administrative assistant that the CEO just got the boot! You figure that this emotional news has got to help the stock price.

d. Your stockbroker calls and recommends that you diversify your portfolio with a few shares of SLB [Schlaumberger] because SLB's request through the FTC and several international trade commissions to finalize the purchase of two oil companies was successful. You act on this information.
c. You call your stockbroker and ask him to buy 500 shares of your company, Best Dressed Computers, Inc., because you just heard from the CEO's administrative assistant that the CEO just got the boot! You figure that this emotional news has got to help the stock price.
Ellie owns stock in Rotary Technologies. Her stock provides a priority claim on dividend payments and on the firm's assets in the event of liquidation. However, her ________ stock ownership does not offer her voting rights.
.

a. common

b. preferred

c. superior

d. callable
b. preferred
A <i>Bond's face</i> value is the same as its:
.

a. risk rating.

b. principal.

c. coupon value.

d. yield.
b. principal.
Daily reporting of the Dow Jones Industrial Average serves to:
.

a. show the direction of the market over time.

b. distort short-term fluctuations for the financial community.

c. identify the beginning of a recession in the economy.

d. disclose the average price of a share of stock on the major exchanges.
a. show the direction of the market over time.
Investment bankers ________ new issues of bonds or stocks by purchasing, at a discount, the entire stock or bond issue of a firm and selling the issue to interested investors at a higher price.
.

a. syndicate

b. underwrite

c. guarantee

d. sanction
b. underwrite
Shareholder Jones sells 100 shares of Very Vegetarian Corporation stock to Investor Smith. This transaction takes place in the:
.

a. primary market.

b. secondary market.

c. initial offerings market.

d. security resale market.
b. secondary market.
Applying what you have learned about investments introduced to you in Chapter 19, put the following investments in order from riskiest to least risky. Which of following lists begin with the <u>least risky</u> investment and ends with the <u>most risky</u>? Least risky = 1; most risky = 5
.

a. 1) Bonds; 2) Mutual Funds; 3) ETFs; 4) Preferred Stock; 5) Common Stock

b. 1) Preferred Stock; 2) Common Stock; 3) Mutual Funds; 4) ETFs; 5) Bonds

c. 1) Common Stock; 2) Bonds; 3) Mutual Funds; 4) ETFs; 5) Preferred Stock

d. 1) Bonds; 2) Common Stock 3) Mutual Funds 4) ETFs 5) Preferred Stock
a. 1) Bonds; 2) Mutual Funds; 3) ETFs; 4) Preferred Stock; 5) Common Stock
The new potato-bar restaurant chain, <i>Hottie Potatee</i> wants to raise an undisclosed amount of funds in order to expand the company-owned potato bar stores, internationally. This move will require the CFO (Chief Financial Officer) to:
.

a. Provide the FTC (Fair Trade Commission) documentation of where and when they plan to develop stores in other countries.

b. Increase his profits. He will take the average U.S. store profits and multiply it by the number of stores he wants to open abroad.

c. Do nothing different than maintaining the funding balance of his business.

d. File full disclosure financial statements and seek the approval of the Securities and Exchange Commission.
d. File full disclosure financial statements and seek the approval of the Securities and Exchange Commission.
Which of the following federal government agencies has responsibility for regulating the various stock exchanges in the U.S.?
.

a. SEC

b. NASDAQ

c. FCC

d. ICC
a. SEC
As your elderly Uncle Bill approaches retirement, he asks for your advice for a safe place to invest several thousand dollars. He wants to receive some kind of payment each year for investing his money without a great deal of risk. You explain:
.

a. Yankee bonds are certain not to default.

b. common stock always pays quarterly dividends.

c. junk bonds do not pay annual interest.

d. treasury and top-grade corporate bonds pay interest two times each year.
d. treasury and top-grade corporate bonds pay interest two times each year.
Jason instructed his stockbroker to buy 100 shares of Utah Industries common stock if and when the price falls to $25 per share. Jason placed a(n):
.

a. market order.

b. odd-lot order.

c. limit order.

d. contingent order.
c. limit order.
By issuing bonds with a _______, the corporation retains the right to pay off the bond prior to the maturity date.
.

a. redemption feature

b. discount clause

c. retirement privilege

d. call provision
d. call provision
Ebony Enterprises decides to pay off its bonds several years before the maturity date. Apparently, the bonds _____________.
.

a. contain an early dismissal clause

b. have an early retirement option

c. are callable

d. have discount authorization
c. are callable
New investors may want to consider _______ funds, which are mutual funds that invest in one particular kind of stock or a particular kind of bond, or even stocks that are representative of the entire market.
.

a. international

b. index

c. global

d. relief
b. index
Bonds sold at a _______, sell for less than face value.
.

a. secondary market

b. discount

c. premium

d. date before the maturity date
b. discount
Which of the following can include an embedded radio-frequency antenna that allows the holder to access secure areas in buildings or buy gas with the swipe of a card?
.

a. smart cards

b. direct deposit cards

c. e-cards

d. check conversion cards
a. smart cards
The community college where Jake works requires all employees to contribute to a pension fund. At this time, he is not too worried about the safety of this contribution because:
.

a. the pensions fund's investments are always backed by the full faith and credit of the U.S. government.

b. pension funds are provided by nonbanks so they are not going to take this money and lend it to others.

c. he is considered a state employee, and as such, he is protected from this fund going bankrupt.

d. pension funds usually make conservative investments.
d. pension funds usually make conservative investments.
The ___________ plays a role in making certain that checks clear, and sellers get paid.
.

a. National Check Register

b. Federal Reserve System

c. Uniform Commercial Check Processors

d. paypal.com network
b. Federal Reserve System
When the value of the U.S. dollar increases relative to other currencies:
.

a. the rate of inflation increases.

b. the size of the national debt decreases.

c. foreign goods become less expensive to U.S. consumers.

d. U.S. goods become less expensive to foreign buyers.
c. foreign goods become less expensive to U.S. consumers.
It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting. As a smart player on the global stage, which of the following strategic decisions will the People's Bank of China probably do on a daily basis?
.

a. Invest its free cash in the securities of other nations whose interest rates remain at a low and acceptable rate, for a long period of time.

b. Limit its global investment of free cash, and continue to invest in the construction trade in China, to build more factories, while providing its clientele with the highest possible interest rates.

c. Invest its free cash in the securities of other nations who do not participate in the same type of industries such as soft goods and electronics.

d. Invest its free cash in the securities of other nations where it can get the highest available interest rate, for the shortest period of time.
d. Invest its free cash in the securities of other nations where it can get the highest available interest rate, for the shortest period of time.
How did the Fed contribute to the recent banking crisis?
.

a. As the regulator of monetary policy, the Fed kept interest rates suppressed.

b. As the regulator of monetary policy, the Fed ignored the warnings of Moody's and other bond rating agencies.

c. The Fed required banks to create adjustable rate mortgages with interest rates significantly higher than those attached to fixed-rate mortgages.

d. The Fed encouraged home ownership.
a. As the regulator of monetary policy, the Fed kept interest rates suppressed.
Which of the following is included in the M-2 definition of the money supply but not the M-1 definition?
.

a. Currency

b. Checking account deposits

c. Traveler's checks

d. Savings account deposits
d. Savings account deposits
The board of governors of the Federal Reserve System determines:
.

a. exchange rates.

b. U.S. monetary policy.

c. and monitors the inflows and outflows of gold reserves to ensure a stable money supply.

d. how much money the U.S. will loan to foreign governments.
b. U.S. monetary policy.
Which of the following institutions primarily finances economic development projects in less-developed countries?
.

a. The International Monetary Fund

b. The World Bank

c. The International Development Administration

d. The International Reserve Bank
b. The World Bank
First Data Corporation has developed the GO-Tag, where:
.

a. you can easily transfer funds from one account to another by implementing your tag number, and pressing "Go".

b. a chip attached to the vendor's cash register immediately tells the vendor if you have enough funds in your checking account to cover the check you are writing.

c. electronic funds transfer systems operate in cyberspace, by tagging each step in the process.

d. a small chip that is attached to a cell phone or smaller card such as a badge that can make a transaction from one account to another without the need to swipe the card.
d. a small chip that is attached to a cell phone or smaller card such as a badge that can make a transaction from one account to another without the need to swipe the card.
Payroll debit cards:
.

a. are protected if lost or stolen.

b. have limited use because they can only act as a credit card, and the recipient does not have access to cash.

c. must go through the Federal Reserve's Automated Clearing House system.

d. can be issued to persons without bank accounts who can use it to pay bills online, or access cash from an ATM machine.
d. can be issued to persons without bank accounts who can use it to pay bills online, or access cash from an ATM machine.
Which of the following is <u>not</u> a favorable characteristic of money?
.

a. Barterability

b. Divisibility

c. Portability

d. Durability
a. Barterability
The ___________ rate represents the interest rate charged by the Fed when loaning funds to member banks.
.

a. discount

b. prime

c. federal funds

d. reserve
a. discount
The Fed Chairman is in control of:
.

a. the world's money supply.

b. the U.S. money supply.

c. fiscal policy.

d. the IMF.
b. the U.S. money supply.
The World Bank provides funding for:
.

a. the developed nations in Europe and Asia.

b. firms that want to participate in international trade but lack foreign exchange.

c. multinational corporations that have a strong credit rating.

d. projects to improve the standard of living in less-developed nations.
d. projects to improve the standard of living in less-developed nations.
The Federal Reserve System consists of ________ Federal Reserve banks.
.

a. 5

b. 9

c. 12

d. 14
c. 12
Savings and loan associations are sometimes known as:
.

a. nonbanks.

b. thrift institutions.

c. credit unions.

d. bankers' banks.
b. thrift institutions.
The Fed requires that banks hold a percentage of their deposits in a vault. This percentage is the _________.
.

a. prime rate

b. working capital requirement

c. discount rate

d. reserve requirement
d. reserve requirement
H & Q Importers arranged to have a French winery ship a large quantity of fine wine to the United States. By signing a(n) ______________ H & Q authorized its bank to make full payment to the French winery if and when the wine arrives at the H & Q warehouse in Boston.
.

a. letter of credit

b. certificate of deposit

c. trade agreement

d. banker's acceptance
a. letter of credit
__________ includes anything that people generally accept as payment for goods and services.
.

a. An intangible asset

b. Money

c. A commodity

d. A barter good
b. Money