FINAL REVIEW Flashcards
(225 cards)
1
Q
Entrepreneurs weigh the differences between the benefits of starting a business and those things that they are
likely to forego because they choose to work for themselves. Such things they are likely to pass-up on are:
A
employer paid benefits such as paid vacation and health insurance.
2
Q
Two factors of production that seem to contribute the most to a nation’s ability to create wealth are:
A
entrepreneurship and knowledge
3
Q
Which of the following statements about factors of production is the most accurate?
A
Entrepreneurship and knowledge are the most important in creating wealth.
4
Q
The threat of terrorism,
A
will certainly affect companies that participate in global trade, but most large U.S. companies do their business
domestically
5
Q
A major benefit of socialism is the:
A
Emphasis on social equality
6
Q
Three important economic indicators of the United States are the:
A
unemployment rate, the price indices, and the gross domestic product (GDP).
7
Q
A __________ is a very severe recession that is usually accompanied by deflation.
A
depression
8
Q
____________ refers to the efforts of the federal government to keep the economy stable by increasing or
decreasing taxes and/or government spending.
A
Fiscal policy
9
Q
In the U.S., the __________ has the role of managing the money supply and interest rates.
A
Federal Reserve Bank
10
Q
Efforts by the Federal Reserve Bank (the Fed) to control the money supply and interest rates are known as:
A
monetary policy
11
Q
Casey is typical of many U.S. businesspeople. Casey feels the U.S. culture defines the model for the rest of
the world, and that the “American way” of doing things is the best. Casey is guilty of:
A
ethnocentricity
12
Q
When studying abroad last year, Blake found that his U.S. dollars did not stretch as far as he had hoped.
Each time he exchanged U.S. dollars for Euros, he gave up more U.S. dollars in exchange for less Euros. The
exchange rate indicates:
A
the euro is weak against the U.S. dollar.
13
Q
Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies
are the result of:
A
changes in the supply of and/or demand for dollars in the global currency market.
14
Q
The “second wave” of offshore outsourcing refers to:
A
moving skilled service jobs such as those in accounting offshore.
15
Q
The purpose of the General Agreement on Tariffs and Trade (GATT) is to:
A
facilitate global trade.
16
Q
Under the floating exchange rate system, the value of a country’s currency is determined by:
A
the currency’s supply and demand in the global market.
17
Q
Which of the following statements is not one of the six steps recommended by experts for improving ethical
behavior at work?
A
Outsiders should be kept outside. There is no reason to share your firm’s corporate code of ethics. It is an internal
and private document.
18
Q
Corporate social responsibility describes the firm’s:
A
concern for the welfare of society.
19
Q
What’s the difference between revenue and profit?
A
Revenue - Total amount of money earned; Gross Income.
Profit - Revenue minus expenses (Labor, Maintenance, etc)
20
Q
What’s the difference between standard of living and quality of life?
A
Standard of Living - Amount of goods and services a person can buy with their income.
Quality of Life - General Public’s well being in terms of political freedom, environment,
education, healthcare, etc
21
Q
What’s risk? How is it related to profit?
A
Risk - The chance that time and money put into a business venture will fail.
-If you put risk into a venture and it fails you will lose profit. -Could amount to enormous profit.
22
Q
What do the terms stakeholders, outsourcing and insourcing mean?
A
Stakeholders are people who have invested either time or money into a business such
as Employees, managers, customers, CEO’s, and actual shareholders. Outsourcing is
when a company hires other companies in other countries to do certain tasks. Insourcing
is when foreign companies hire domestic companies to do a specific task
23
Q
What are some of the advantages of working for others?
A
Some advantages of working for others is that there’s not as much risk, steady salary,
Healthcare + other benefits.
24
Q
What benefits do you lose as an entrepreneur, and what do you gain?
A
You have the freedom to make your own decisions, opportunity, and potential for wealth
while sacrificing the benefits working for others often provides.
25
What are the five factors of production? Which ones seem to be the most important for creating
wealth?
The factors of production are: land, labor, capital, entrepreneurship, and knowledge. Of
these, entrepreneurship and knowledge seem to be the most important
26
What are four ways the government can foster entrepreneurship?
The government can foster entrepreneurship by: Allowing private ownership of business.
Passing laws that enable businesses to write enforceable contracts. Establishing a
currency that is tradable in world markets. Minimize corruption in business and in its own
ranks.
27
What’s the difference between effectiveness, efficiency and productivity?
Effectiveness means producing the desired results. Efficiency means producing goods
and services using the least amount of resources. Productivity is the amount of output
you generate given the amount of input, such as the number of hours you work.
28
What’s empowerment?
Empowerment is allowing workers to make decisions essential to producing high-quality
goods and services.
29
What are some of the major issues affecting the economy today?
Technology changes, identity theft, changing demographics, diversity, climate change,
war and terrorism are just several issues
30
What major factor caused people to move from farming to manufacturing and from manufacturing
to the service sector?
Efficiencies in agriculture led to the reduction in farms and growth in industry caused
workers to leave the farm and come to the cities. The growth of efficiencies in production
had the same effect as in agriculture. As factories became more efficient and
technologically driven, workers migrated to the service sector.
31
What does the future look like for tomorrow’s college graduates?
The information-based global revolution will alter all sections of the economy. It will be an
interesting opportunity for college graduates.
32
What’s the difference between macroeconomics and microeconomics?
Macroeconomics studies the operation of a nation’s economy as a whole, and microeconomics studies the behavior of people and operations in particular markets.
33
What’s better for an economy than teaching a man to fish?
Teach man to start a fish farm. This creates jobs and economic growth for employees and communities as well as themselves
34
What does Adam Smith’s term invisible hand mean? How does the invisible hand create wealth for a country?
Adam Smith’s phrase ‘invisible hand’ is used to describe the process that turns self directed gain into social and economic benefits for all. Smith’s phrase ‘invisible hand’ is referring to businesspeople who set out to achieve their financial and mental goals and this overall effects the country. These businesspeople are benefiting the economy and it works almost as an invisible hand, as workers and those in business prosper with goods and services, the rest of the country is benefiting in ways from a sort of invisible help.
35
What are the four basic rights that people have under free-market capitalism?
Under free-market capitalism, people have four basic rights: The right to own private property, the right to own a business and keep all that business’s profits, the right to freedom of competition, and the right to freedom of choice.
36
How do businesspeople know what to produce and in what quantity?
businesspeople know how to produce to match the quantity because they are able to see what the economy wants and doesn’t want. as long as merchandise is being bought, they produce more and if it increases dramatically they increase making products. the stores will let them know how much is selling and what the economy is demanding
37
How are prices determined?
Prices are determined by the buyers and sellers negotiating in the marketplace.
38
What are the four degrees of competition and what are some examples of each?
the four degrees of competition: 1) perfect competition, when there are many sellers in the market and none is large enough to dictate the price of a product. ex: farming. 2) monopolistic competition, a large number of sellers produce very similar products that buyers nevertheless perceive as different. ex: tshirts. 3) oligopoly, just a few sellers dominate the market. ex: gasoline, automobiles, tobacco. 4) monopoly, one seller controls the total supply of a product or service, and sets the price. ex: natural gas, water, electric power
39
What led to the emergence of socialism?
Socialists believe that the distribution of wealth should be more evenly distributed than in free-market capitalism. Government should be empowered to carry out the distribution of wealth
40
What are the benefits and drawbacks of socialism?
A major benefit of socialism is social equality. A drawback of socialism is the promised create more equality than capitalism, this takes away some of business people’s incentives.
41
What countries still practice communism?
China, North Korea, Vietnam, Laos, and Cuba still practice communism today
42
What are the characteristics of a mixed economy?
ownership of goods by both private and government or state owned entities. another characteristic of a mixed economy is the protection of private property and allows free market.
it protects private property, allows the free market and the laws of supply and demand to determine prices.
43
Name the three economic indicators and describe how well the U.S. is doing based on each indicator
The three key economic indicators are the Gross Domestic Product (GDP), the unemployment rate, and the price indexes.
The U.S. GDP is approximately about $14 trillion. Our high GDP allows citizens to enjoy a high standard of living.
In 2000, the U.S. reached it lowest unemployment rate in over 30 years. However, the recession of 2008-2009 may lead unemployment to at least 10 percent.
The consumer price index (CPI) has not risen to high levels keeping inflation in check. However the recession has caused fears of deflation.
44
What’s the difference between a recession and a depression?
The only difference between a recession and a depression is that depression is usually accompanied by deflation.
45
How does the government manage the economy using fiscal policy?
The government manages fiscal policy by increasing or decreasing taxes or government spending.
46
What does the term monetary policy mean? What organization is responsible for monetary policy?
Monetary policy is the management of money supply and interest rates by the Federal Reserve Bank. The Fed is responsible for monetary policy.
47
What are two of the main arguments favoring the expansion of U.S. businesses into global markets?
There is not a nation that can give their goods and services to everyone's needs, and 2. Cheap imports and global trading keep the goods prices down
48
What’s comparative advantage, and what are some examples of this concept at work in global markets?
Comparative advantage is the theory that a country should sell their products that they can produce most effectively to those countries who cannot produce the products effectively or at all. An example of comparative advantage would be the fact that the U.S. has an advantage with produces technology and engineering
49
How are a nation’s balance of trade and balance of payments determined?
The balance of trade and payments are determined by, trades: the total of the nations compared to imports over a time period, and payments: which is the money coming in and out of the country with tourism, foreign aid and the military.
50
What’s meant by dumping in global trade?
What is meant by ‘dumping’ is when products are sold in another country at lower prices than the original country where it's made.
51
What are four major hurdles to successful global trade?
1. Dealing with differences in sociocultural forces
2. economic and financial forces
3. legal and regulatory forces
4. physical and environmental forces
52
What does ethnocentricity mean and how can it affect global success?
Ethnocentricity is the attitude that one's own culture is better than another culture or someone else's views. This may affect the global success because outside of the united states there are many other cultures as well and services may be stunned or stopped if something is done to offend another culture in the nation
53
How would a low value of the dollar affect U.S. exports?
A low value of the dollar would affect U.S. exports because you would be spending more money to produce the product than you will be making. Products need to be listed for lower prices.
54
What does the Foreign Corrupt Practices Act prohibit?
The Foreign Corrupt Practices Act prohibits questionable payments to foreign officials to help secure business contracts
55
What are the advantages of using licensing as a method of entry in global markets? What are the disadvantages?
Advantages: A firm can gain revenues it would not have generated at its home market Licensors spend little or no money to produce and market their products because the licensees are required to do it. Disadvantages: Licensors must grant the licensing rights to the licensees for extended periods of time. If a product becomes successful, the bulk of the profits will go to the owner.
56
What services are usually provided by an export-trading company?
The services provided from an export-trading company will match buyers and sellers from different countries, deal with foreign customs offices, and weight and measurement conversions. It also assists exporters with warehousing, billing, and insurance.
57
What’s the key difference between a joint venture and a strategic alliance?
A joint venture is when two or more companies join to undertake a major project . A strategic alliance is a long-term partnership between two or more companies that helps each company build up a competitive market advantage.
58
What makes a company a multinational corporation?
To be multinational you must manufacture and market products in many different countries and have multinational stock ownership and management
59
What are the major threats to doing business in global markets?
1. Terrorism 2. Nuclear proliferation 3. income inequality
60
What key challenges must India and Russia face before becoming global economic leaders?
Russia must solve it's political, financial and social problems before becoming a global economic lead. India must address it's difficult trade laws and inflexible bureaucracy.
61
What does the acronym BRIC stand for?
Brazil, Russia, India, China
62
What are the two primary concerns about offshore outsourcing?
1. Loss of jobs 2. Safety
63
What are the advantages and disadvantages of trade protectionism and of tariffs?
Trade protectionism and tariffs are supposed to be used to regulate the imports and exports of goods. The disadvantage is that the goods sometimes cost more to purchase due to the cost of the tariffs.
64
What’s the primary purpose of the WTO?
To mediate trade disputes among nations.
65
What’s the key objective of a common market like the EU?
The key objective of a common market is being able to trade regionally without having a tariff and a set couple of laws to facilitate the exchanges.
66
Which three nations comprise NAFTA?
United States, Canada, Mexico
67
What are ethics?
Ethics are the moral behavior of the people or one person. This behavior is seen as morally right by the world or by their people in the same culture, group, and more.
68
How do ethics differ from legality?
Ethics is the moral behavior accepted by society whilst legality is more formal, more limiting. Legality only applies to laws.
69
When faced with ethical dilemmas, what questions can you ask yourself that might help you
make ethical decisions?
1. Is my action legal? 2. Is it balanced? 3. How will it make me feel about myself?
70
What are compliance-based and integrity-based ethics codes?
Compliance based ethics codes emphasize preventing unlawful behavior by increasing control and penalizing wrongdoers. Integrity based ethics codes define the organization's guiding values, create an environment that supports ethically sound behavior, and stress shared accountability.
71
What are the six steps to follow in establishing an effective ethics program in a business?
1. Top management must adopt and unconditionally support an explicit corporate code of conduct. 2. Employees must understand that expectations for ethical behavior begin at the top and that senior management expects all employees to act accordingly. 3. Managers and others must be trained to consider the ethical implications of all business decisions. 4. An ethics office must be set up with which employees can communicate anonymously. Whistleblowers must feel protected from retaliation. 5. Outsiders such as suppliers, subcontractors, distributors, and customers must be told about the ethics program. 6. The ethics code must be enforced with timely action if any rules are broken.
72
What’s corporate social responsibility, and how does it relate to each of a business’s major
stakeholders?
A business's concern for the welfare of society. Businesses demonstrate responsibility to stakeholders b 1. satisfying customers with goods and services of real value; 2. making money for investors; 3. creating jobs for employees, maintaining job security, and seeing that hard work and talent are fairly rewarded; and 4. creating new wealth for society, promoting social justice, and contributing to making the businesses' own environment a better place.
73
What’s a social audit, and what kinds of activities does it monitor?
A systematic evaluation of an organization's progress towards implementing socially responsible and responsive programs.
A social audit monitors corporate social responsibility efforts, industrial projects that might have a negative impact on the environment, and violations.
74
How are U.S. businesses demanding socially responsible behavior from their international
suppliers?
Many U.S. businesses are demanding socially responsible behavior from their international suppliers by making sure their suppliers do not violate U.S. human rights and environmental standards.
75
Why is it unlikely that there will be a single set of international rules governing
multinational companies soon?
It's unlikely there will be a single set of international rules governing multinational companies because of the widespread disparity among global nations as to what constitutes ethical behavior.
76
This company has a program it calls Social Service Leave that allows employees to take up to
a year off to work for a nonprofit organization while earning their full salary and benefits,
including job security. What is the name that company?
The companies that provide paid service leave is a lengthy list like places like Netflix.
American Income Life.
And more.
77
Most people who start businesses in the U.S. are sole proprietors. What are
the advantages and disadvantages of sole proprietorships?
Advantages of sole proprietorships: the ease of starting and ending the business, being your own boss, pride of ownership, leaving a legacy, retention of company profits, no special taxes. Disadvantages: unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth, limited life span.
78
Why would unlimited liability be considered a major drawback to sole
proprietorships?
unlimited liability is a drawback to sole proprietorships because if the business stops profiting the owner of the business is solely responsible for the debt.
79
What’s the difference between a limited partner and a general partner?
a limited partner invests money in the business but has no management responsibility or liability for losses beyond investment, while a general partner (owner) has unlimited liability.
80
What are some of the advantages and disadvantages of partnerships?
some advantages of partnerships: more financial resources, shared management and pooled/complementary skills and knowledge, longer survival, and no special taxes. some disadvantages: unlimited liability, division of profits, disagreements among partners, and difficulty of termination.
81
What are the major advantages and disadvantages of incorporating a
business?
the advantages include more money for investment, limited liability, size, perpetual life, ease of ownership change, ease of drawing talented employees, and separation of ownership from management. the disadvantages include initial cost, paperwork, size, difficulty in termination, double taxation, and possible conflict with a board of directors.
82
What’s the role of owners (stockholders) in the corporate hierarchy?
Stockholders do not have to be employees of the corporation. They are investors who have limited liability. they elect the board of directors of a company who select the management to control the company.
83
If you buy stock in a corporation and someone gets injured by one of the
corporation’s products, can you be sued? Why or why not?
Stockholders in a corporation have limited liability meaning as owners they are responsible for its losses only up to the amount they invested. The corporation could be sued and forced out-of-business but the stockholder would only lose what he/she invested.
84
Why are so many new businesses choosing a limited liability company (LLC)
form of ownership?
Limited liability companies have become a popular way to form a business since all fifty states now recognize LLCs. Some of the advantages of LLCs are: Limited liability, choice of taxation (can be taxed as a partnership or corporation), flexible ownership rules, flexible distribution of profit and losses, operating flexibility.
85
What are some of the factors to consider before buying a franchise?
some factors to consider before buying a franchise are: home based or not, price of name for franchise, risk, running the business correctly, location of franchise.
86
What opportunities are available for starting a global franchise?
Successful franchising in global markets offers the same opportunities as in domestic markets. However, franchisers must be careful to adapt to the region where they wish to expand. McDonald's for example has more than 33,000 restaurants in 119 countries.
87
What’s a cooperative?
a cooperative is a form of business that is owned and controlled by the people who use it—producers, consumers, or workers with similar needs who pool their resources for mutual gain. Cooperatives are a major force in agriculture and other industries today.
88
Why are people willing to take the risks of entrepreneurship?
Opportunity, profit, independence, and challenge
89
What are the advantages of entrepreneurial teams?
Team members can combine creative skills with production and marketing skills right
from the start. Entrepreneurial teams can also ensure more cooperation and
coordination later among functions in the business.
90
How do micropreneurs differ from other entrepreneurs?
While other entrepreneurs are committed to the quest for growth, micropreneurs know
they can be happy even if their companies never appear on a list of top-ranked
businesses.
91
What are some opportunities and risks of web-based businesses?
Make enterprise zones (specific geographic areas to which governments try to attract
private business investment by offering lower taxes and other government support).
92
What are the sections of a business plan as outlined in the text?
Section 1: Executive Summary (two to three page summary of the proposed venture).
Section 2: Company Background (describe company operations to date, potential legal
considerations, and areas of risk and opportunity). Section 3: Management Team
(include and organization chart, job descriptions of listed positions, and detailed resumes
of the current and proposed executives). Section 4: Financial Plan (provide five-year
projections for income, expenses, and funding sources). Section 5: Capital Required
(indicate the amount of capital needed to commence or continue operations, and
describe how these funds are to be used.
93
Why do many small businesses avoid doing business globally?
Financing is often difficult to find. Many people don't know how to get started and do not
understand the cultural differences in foreign markets. The bureaucratic red tape is often
overwhelming.
94
What are some of the advantages small businesses have over large businesses
in selling in global markets?
Foreign buyers enjoy dealing with individuals rather than large corporations because (1)
small companies provide a wider variety of suppliers and can chip products more quickly
and (2) small companies give more personal service.
95
Describe the changes occurring today in the management function.
Past- managers jobs consisted of telling people what to do, watch over
Today- managers are more progressive, emphasize team building, tend to
guide, motivate and coach
96
Describe the four functions of management.
Planning- determine the best strategies and tactics to achieve organizational
goals and objectives
Organizing- design structure and create conditions and a system to achieve
goals
Leading- communicating, guiding, training, coaching and motivating others
Controlling- measuring what actually occurs to meet organizations goals
97
Relate the planning process and decision making to the accomplishment of company
goals
Goals- broad long-term achievements, Objectives- specific short-term plans,
SWOT: strengths weaknesses opportunities threats, Strategic- 5+ years
planning, Tactical- monthly/yearly planning, Operational- day-to-day planning,
Contingency- plan b
98
What are some of the changes happening in management today?
Some changes in management today are that leaders tend to be younger,
more of them are female, and fewer of them were educated at elite
universities. They tend to put more emphasis on motivation, teamwork, and
cooperation.
99
What’s the definition of management used in this chapter?
The process used to accomplish organizational goals through planning,
organizing, leading, and controlling people and other organizational
resources.
100
What are the four functions of management?
(1) Planning, (2) organizing, (3) leading, and (4) controlling.
101
What’s the difference between goals and objectives?
Goals are broad, long-term achievements that organizations aim to
accomplish, whereas objectives are specific, short term plans made to help
reach the goals.
102
What does a company analyze when it does a SWOT analysis?
Companies analyze the strengths and weaknesses of the firm and
opportunities and threats facing it
103
What are the differences between strategic, tactical and operational planning?
Strategic planning is broad, long range planning that outlines the goals of the
organization, while tactical planning is specific, short term planning that lists
organizational objectives. Operational planning is more like tactical planning
and sets specific timetables and standards.
104
What are the seven Ds in decision making?
The 6 D’s of decision making are (1) define the situation; (2) describe and
collect needed information; (3) develop alternatives; (4) decide which
alternative is best; (5) do what is indicated (begin implementation); and (6)
determine whether the decision was a good one, and follow up.
105
How does enabling help achieve empowerment?
Enabling is giving the workers the education and tools they need to assume
their new decision making powers
106
What are the five steps in the control process?
(1) setting clear standards, (2) monitoring and recording performance, (3)
comparing performance with plans and standards, (4) communicating results
and deviations to employees, and (5) providing positive feedback for a job well
done and taking corrective action if necessary
107
What’s the difference between internal and external customers?
External customers are dealers who buy products to sell to others, and
ultimate customers who buy products for their own personal use. Internal
customers are individuals and units within the firm that receive services from
other individuals or units.
108
What do the terms division of labor and job specialization mean?
Division of labor is the assignment of different parts of a manufacturing process or task to different people in
order to improve efficiency. Job specialization is the process of focusing one's occupational
concentration on a specific area of expertise.
109
What are the principles of management outlined by Fayol?
Fayol introduced principles such as unity of command, hierarchy of authority, division of labor, subordination of
individual interests to the general interest, authority, clear communication channels, order, and
equity
110
What did Weber add to the principles of Fayol?
Weber added principles of bureaucracy such as job descriptions, written rules and decision guidelines, consistent
procedures, and staffing and promotions based on qualifications.
111
Why are organizations becoming flatter?
To quickly respond to customer demands. A flatter organization gives lower-level employees the authority and responsibility to make decisions directly affecting customers.
112
What are some reasons for having a narrow span of control in an organization?
The span of control narrows at higher levels of the organization, because work becomes less
standardized and managers need more face-to face communication.
113
What are the advantages of departmentalization?
1-Employees can develop skills within a department as they master more skills
2-The company can achieve economies of scale by centralizing all the resources it needs and locate experts in that area
3-Employees can coordinate work within the function, and top management can easily direct and control various departments' activities
114
What are some disadvantages of departmentalization?
1-Departments may not communicate well
2-Employees may identify with their department's goals rather than the organization's
3-The company's response to external changes may be slow
4-People may not be trained to take different managerial responsibilities
5-Department members may engage in groupthink and may need input from outside to become more creative
115
What’s the difference between line and staff personnel?
Line personnel are responsible for directly achieving organizational goals (workers, distribution people, and
marketing personnel) Staff personnel advise and assist line personnel in meeting their goals.
116
What management principle does a matrix-style organization challenge?
The flexibility inherent in the matrix-style organization directly challenge the rigid line and
line-and-staff organization structures
117
What’s the main difference between a matrix-style organization’s structure and the use
of cross-functional teams?
Cross-functional teams tend to be long-lived as compared to
| the temporary and fluid nature of teams in a matrix-style organization
118
What’s an inverted organization?
An organization that has contacted people at the top and the chief executive officer at the bottom of the organization chart
119
Why do organizations outsource functions?
To keep up with market and technology advances
120
What’s organizational culture?
Organizational culture is a system of shared assumptions, values, and beliefs, which governs how people behave in organizations. These shared values have a strong influence on the people in the organization and dictate how they
dress, act, and perform their jobs.
121
Briefly explain the managerial attitudes behind Theories X,
X - 1. Employees dislike work and will try to avoid it.
2. Employees prefer to be controlled and directed.
3. Employees seek security and responsibility.
4. Must be intimidated by managers to perform.
5. Motivated by financial rewards.
122
Briefly explain the managerial attitudes behind Theory Y
Y - 1. Employees view work as a natural part of life.
2. Prefer limited control and direction.
3. Will seek responsibility under proper work conditions.
4. Perform better in work environments that aren't intimidating.
5. Employees are motivated by many different needs.
123
Briefly explain the managerial attitudes behind Theory Z
Z - 1. Employee involvement is the key to increased productivity.
2. Employee control is implied and informal.
3. Employees prefer to share responsibility and decision making.
4. Employees perform better in environments that foster trust and cooperation.
5. Employees need guaranteed employment and will accept slow evaluations and promotions.
124
Explain goal-setting theory
Setting ambitious but attainable goals that can motivate workers and improve performance if
the goals are accepted, accompanied by feedback.
125
Evaluate expectancy theory. When could expectancy theory apply to your
efforts or lack of effort?
During a review - if you didn't meet the standards that were previously set for you there could
be consequences. If you exceeded them you could be rewarded.
126
Explain the principles of equity theory.
Employees try to maintain equity between inputs and outputs compared to others in similar
positions. So basically they compare themselves to other employees in their same or similar
positions. When people think they are not being treated equally they will change their
productivity habits in a negative way.
127
What are several steps firms can take to increase internal communications and
thus motivation?
Create an organizational culture that rewards listening - providing feedback, adopting
employee suggestions, etc.
Train supervisors and managers to listen.
Use effective questioning techniques.
Remove barriers to open communication - do not have separate areas for managers, dress
code, etc.
Avoid vague and ambiguous communication - using general phrases that leave people
wondering if they did something wrong (ex. "mistake were made")
Make it easy to communicate - encouraging employees to do lunches together and hold
meetings/discussion groups.
Ask employees what is important to them - holding "stay interviews" rather than asking what
they could have done better during an exit interview
128
What problems may emerge when firms try to implement participative
management?
The issues that may arise will be people and workers not following that rule. They wouldn't
follow it because they believe their own opinions matter more and they would refuse.
129
Why is it important to adjust motivational styles to individual employees? Are
there any general principles of motivation that today’s managers should
follow?
It is important to tailor motivational styles to specific generations because different
generations communicate differently and are looking to get different things out of their
career/place of employment. General principles of motivation that can be used all around
generation to generation is giving people the right tools to complete the job properly and
recognizing those who are putting in effort and doing a good job. Not punishment or rewards.
130
What are the major laws that affected union growth, and what does each
one cover?
1. Norris-LaGuardia Act-courts can't order injunctions for nonviolent activities.
National Labor Relations Act (Wagner Act)- right to unionize.
Fair Labor Standards Act-minimum wage and maximum hours.
Labor-Management Relations Act (Taft-Hartley Act)-amended Wagner prohibiting required union membership.
Labor-Management Reporting and Disclosure Act (Landrum-Griffin Act)-guaranteed individual rights of union members when dealing with their union.
131
How do changes in the economy affect the objectives of unions?
Unions and their objectives have frequently shifted with social and economic trends. In the
1970s the primary objective was additional pay and benefits; while in the 1980s unions focused
on job security. During the 1990s and 2000s job security remained a key issue as unions tried to
cope with global competition and outsourcing.
132
What are the major tactics used by unions and by management to assert
their power in contract negotiations?
lockouts, injunctions and bringing in strikebreakers
133
What types of workers do unions need to organize in the future?
To remain relevant, unions must attract new members. This includes more professional,
female and foreign born workers. Both the Teamsters Union and Service Employees
International Union have started to target workers in health care, technology and finance.
134
How does top-executive pay in the U.S. compare with top-executive pay in
other countries?
Executive pay in the U.S. is significantly higher than in other countries. For example, the
typical European CEO earns only about 40 percent what their U.S. counterpart makes.
135
What’s the difference between pay equity and equal pay for equal work?
The Equal Pay Act of 1963 provides that workers revive equal pay for equal work (with
exceptions for seniority, merit, or performance). Pay equity is the demand for equivalent pay for
jobs requiring similar levels of education, training, and skills
136
How is the term sexual harassment defined and when does sexual behavior
become illegal?
7. Sexual harassment refers to any unwelcome sexual advance, requests for sexual favors, and
other verbal or physical conduct of a sexual nature that creates a hostile work environment. This
behavior is considered illegal if the conduct unreasonably interferes with a workers' job
performance or creates an intimidating, hostile, or offensive work environment. It is also
considered illegal if the sexual harassment constitutes a quid pro quo.
137
What are some of the issues related to childcare and elder care and how
are companies addressing those issues?
Responsive companies are providing child care on the premises, emergency care when
scheduled care is interrupted, discounts with child care chains, vouchers to be used at the
employee's chose care center, and referral services. Workers who need to provide elder care for
dependent parents or others are generally more experienced and vital to the mission than
younger workers are. The cost to business is very large and growing.
138
What does it mean to “help the buyer buy?”
Websites that help buyers find the best price, identify product features, and question
sellers
139
What are the three parts of the marketing concept?
A customer orientation - find out what consumers want and provide it for them
(2) A service orientation - customer satisfaction/customer-oriented
(3) A profit orientation - focus on those goods and services that will earn the most profit and enable the
organization to survive and expand to serve more consumer wants and needs
140
What are the Four P’s of the Marketing Mix?
price, product, promotion, and place
141
What are the four steps in the marketing research process?
Defining the problem or opportunity and determining the present situation,
Collecting research data,
Analyzing the data,
Choosing the best solution and implementing it.
142
What’s environmental scanning?
The process of identifying factors that affect marketing success
143
What factors are included in environmental scanning?
```
Global factors,
Technological factors,
Sociocultural factors,
Competitive factors,
Economic factors
```
144
Define the terms consumer market and business-to-business market
Consumer Market: All the individuals or households that want goods and services for
personal use and have the resources to buy them.
Business-to-business: Individuals and organizations that buy goods and services to use in production or to sell, rent, or
supply to others.
145
Name and describe five ways to segment the consumer market.
Geographic Segmentation, Demographic Segmentation, Psychographic Segmentation,
Benefit Segmentation, Volume (Usage) Segmentation
146
What’s niche marketing and how does it differ from one-to-one marketing?
Niche marketing Identifies small but profitable market segments and designs or finds
products for them. One-to-one marketing focuses on Developing a unique mix of goods
and services for each individual consumer
147
What are four key factors that make B2B markets different from consumer
markets?
There are relatively few customers. Customers tend to be large buyers. Markets are
geographically concentrated. Buyers are more rational than emotional. Sales are direct.
Promotions focus heavily on personal selling
148
What value enhancers may be included in a total product offer?
Some value enhancers that may be included in the total product offering include: brand
name, warranty, service, store surroundings, and speed of delivery.
149
What’s the difference between a product line and a product mix?
Product line refers to the group of products that are physically similar or intended for a
similar market. These products may face similar competition.. The product mix is the
total of the product lines offered by a particular company
150
Name the four classes of consumer goods and services and give examples
of each
Convenience goods and services - candy, gum and milk.
Shopping goods and services - clothes, shoes and appliances.
Specialty goods and services - fur coats, imported chocolates and business consultants.
Unsought goods and services - burial service, insurance and emergency drain cleaning.
151
Describe three different types of industrial goods.
Capital items are expensive products that last a long time. Accessory equipment
consists of capital items that are not quite as long-lasting or expensive as installations
and include computers, copy machines, and various tools
152
What functions does packaging now perform?
(1) attract the buyer's attention, (2) protect
the goods inside, (3) be easy to open, (4) describe and give information, (5) explain the
benefits of the good inside, (6) provide information on warranties, warnings and other
consumer matters, and (7) give some indication of price, value, and uses.
153
What’s the difference between a brand name and a trademark?
Brand names consist of a word, letter or group of words or letters that set it apart from
other goods and services. A trademark is a brand that has exclusive legal protection for
both its brand name and design.
154
Explain the difference between a manufacturers’ brand, a dealer brand,
and a generic brand.
A manufacturers' brand represents manufacturers that distribute their products nationally such as Xerox or Dell.
A dealer brand is often referred to as a private label and will not carry the manufacturers name, but rather carries the name of the distributor instead. For example, Kenmore is a dealer brand sold via Sears.
A generic brand is the name of an entire product category.
155
What are the key elements of brand equity?
Brand equity is the value of the brand name and associated symbols. The elements of
brand equity include: brand loyalty, brand awareness, and brand association
156
What are the six steps in the new-product development process?
Idea generation, development, product screenings, testing, product analysis, and commercialization
157
What’s the difference between product screening and product analysis?
During the product screening process the number of new-product ideas a firm is working
on is reduced, so that it may focus on the most promising ideas. Product analysis occurs
after screening and involves making cost estimates and sales forecasts to get a feeling
for the profitability of new-product ideas.
158
What are the two steps in commercialization?
promoting the product to distributors and retailers, and the development of strong advertising and sales campaigns.
159
What’s the theory of the product life cycle?
The product life cycle is a theoretical model which explains what happens to sales and
profit for a product over a particular period of time. This model has four stages:
introduction, growth, maturity, and decline.
160
List two short-term and two long-term pricing objectives. Can the two be
compatible?
Short-term pricing objectives include loss leaders and is designed to build traffic as well
as achieving greater market share.
Long-term pricing objectives include achieving a target return on investment and creating a certain image.
It is important that marketing managers set pricing objectives in context of other marketing decisions, since the pricing
objectives may differ greatly.
161
What are the limitations of a cost-based pricing strategy?
The limit of a cost-based pricing system is that in the long run it is not the producer that
establishes price but rather the market place. To effectively establish price, the producer
must take into account competitor prices, marketing objectives, actual cost, and the
expected cost of product updates
162
What’s psychological pricing?
Psychological pricing involves setting the price of goods or services at price points that
make the product appear less expensive.
163
What’s a channel of distribution and what intermediaries participate in it?
consists of agents, brokers, wholesalers, and retailers that join together to transport and
store goods in their path or channel.
164
Why do we need intermediaries? Illustrate how intermediaries create
exchange efficiency.
Perform tasks such as transporting, storing, selling, advertising and relationship building.
They are able to perform these tasks faster and more cheaply than most manufacturers
creating a cost savings.
165
How would you defend intermediaries to someone who said getting rid of
them would save consumers millions of dollars?
The reason that marketing intermediaries have not been eliminated is they add value
that greatly exceeds their cost.
166
Describe the activities of rack jobbers and drop shippers?
Furnish racks full of merchandise like toys, health and beauty aids to retailers. They
display the items and sell them on consignment, keeping title to the goods until they are
sold.
Drop shippers solicit orders and have the merchandise shipped directly from
producer to the buyer. They own the merchandise but do not handle it, stock it or deliver
it
167
What kinds of products would call for each of the different distribution
strategies: intensive, selective, and exclusive?
Intensive distribution includes convenience items such as gum, magazines, candy and
cigarettes.
Selective distribution includes items such as appliances, furniture, and
clothing.
Exclusive distribution includes specialty products such as fly-fishing gear or
equipment for snow skiing.
168
What four systems have evolved to tie together members of the channel of
distribution?
The four systems that have emerged to tie firms together are: corporate systems,
contractual systems, administered systems, and supply chains
169
How does logistics differ from distribution?
Logistics differs from distribution in many ways. Logistics is the planning, implementing,
and controlling of the physical flow of materials, final goods, and related information from
points of origin to points of consumption to meet customer requirements at a profit.
Distribution is much less complex than logistics and simply involves moving the product
from the manufacturer to the end consumer.
170
What are inbound logistics, outbound logistics, and reverse logistics?
Inbound logistics is the process of bringing raw materials, packaging, other goods and services, and information from suppliers to producers.
Outbound logistics manages the flow of finished products and information to business buyers and them to consumers.
Reverse logistics brings goods back to the manufacturer because of defects or forrecycling.
171
What are the four traditional elements of the promotion mix?
advertising,
personal selling,
public relations,
and sales promotion
172
What are the three most important advertising media in order of dollars
spent?
television, direct mail, and digital.
173
What are the seven steps in the B2B selling process?
(1) prospecting and qualifying,
(2) pre-approach,
(3) approach,
(4) make presentation,
(5) answer objections,
(6) close sale,
(7) follow-up.
174
What are the three steps in setting up a public relations program?
(1) listen to the public,
(2) develop policies and procedures in the public interest,
(3) tell people you're being responsive to their needs.
175
What are the sales promotion techniques used to reach consumers?
External sales promotions to consumers rely on samples, coupons, cents-off deals,
displays, store demonstrators, premiums, and other incentive
176
What sales promotion techniques are used to reach businesses?
Internal sales promotion activities include sales training, sales aids, audiovisual displays,
and trade shows
177
What’s viral marketing?
a broad term that describes everything from paying customers to say positive things
online to setting up multilevel selling schemes whereby consumers get commissions for
directing friends to specific sites
178
What are blogging and podcasting?
A blog is an online diary that allows the user to create and update with text, photos, or
links to other sties. Podcasting is a means of distributing audio and video programs
online
179
Describe a push strategy, a pull strategy and the pick economy.
the producer uses advertising, personal selling, sales promotion, and all other
promotional tools to convince wholesalers and retailers to stock and sell merchandise.
A pull strategy directs all advertising and sales promotion toward the consumer.
Customers who pick out their products from online outlets or who do online comparison shopping
180
What’s the key difference between managerial and financial accounting
Managerial accounting provides information and analyses to managers within the firm to assist them in decision making.
Financial accounting provides information and analyses to external users of data such as creditors and lenders
181
How’s the job of a private accountant different from that of a public
accountant?
A public accountant provides services for a fee to a variety of companies,
whereas a private accountant works for a single company.
Private and public accountants do essentially the same things with the exception of independent
audits. Private accountants do perform internal audits, but only public
accountants supply independent audits
182
What’s the job of an auditor? What’s an independent audit?
Auditors review and evaluate the standards used to prepare a company's
financial statements.
An independent audit is conducted by a public accountant
and is an evaluation and unbiased opinion about the accuracy of a company's
financial statements.
183
How is the job of the bookkeeper different from an accountant?
bookkeepers are responsible for the recording of financial transactions whereas
accountants are responsible for classifying, analyzing, interpreting, reporting, and
summarizing this financial data
184
What’s the purpose of accounting journals and a ledger?
The purpose of a journal is to keep record of transactions as they happen, and
the ledger to show overall changes in business accounts over time.
185
Why does a bookkeeper prepare a trial balance?
The general purpose of producing a trial balance is to ensure the entries in a
company's bookkeeping system are mathematically correct.
186
How has computer software helped businesses in maintaining and
compiling accounting information?
Computers can record and analyze data and provide financial reports. Software
can continuously analyze and test accounting systems to be sure they are
functioning correctly.
Computers can help decision making by providing
appropriate information, but they cannot themselves make good financial
decisions. Accounting applications and creativity are still human functions.
187
What do we call the formula for the balance sheet? What three accounts
does it include?
The fundamental accounting equation is the basis for the balance sheet. The
equation is Assets = Liabilities + Owners' equity
188
What does it mean to list assets according to liquidity?
Accountants list assets on a firm's balance sheet in order of their liquidity, or the
ease with which they can convert them into cash. Speedier conversion means
higher liquidity.
189
What’s the difference between long-term and short-term liabilities on the
balance sheet?
Current liabilities (short-term liabilities), to be paid in one year or less, are higher
on the balance sheet due to more liquidity. Long-term liabilities, not due for one
year or longer, are below current liabilities on the balance sheet due to lower
liquidity.
190
What’s owners’ equity and how do we determine it?
Owners' equity is the amount of the business that belongs to the owners, minus
any liabilities the business owes. The formula for owners' equity, then, is assets
minus liabilities.
191
What are the key steps in preparing an income statement?
The income statement reports the firm's financial operations over a particular
period of time, usually a year, a quarter of a year, or a month. An income
statement includes: revenue, costs of goods sold, gross profit (gross margin),
operating expenses, net income before taxes, taxes, and net income or loss.
192
What’s the difference between revenue and income on the income
statement?
On an income statement, revenue is money received from selling goods and
services. Income is the money received from selling goods and services minus
expenses such as taxes; income = revenue - expenses.
193
Why is the statement of cash flows important in evaluating a firm’s
operations?
Cash flow is simply the difference between cash coming in and cash going out of
a business. Poor cash flow constitutes a major operating problem for many
companies. It can result in defaulting on a loan or bankruptcy
194
What’s the primary purpose of performing ratio analysis using the firm’s
financial statements?
Ratio analysis provides the firm with information about its financial position in key
areas for comparison to other firm in its industry and its own past performance
195
What are the four main categories of financial ratios?
liquidity ratios,
leverage (debt) ratios,
profitability (performance) ratios,
activity ratios
196
What’s the primary purpose of a securities exchange?
Securities exchange's primary purpose is to serve as a place for businesses to find
long-term funding to finance capital needs.
197
What does NASDAQ stand for? How does this exchange work?
The NASDAQ (originally know as the National Association of Securities Dealers
Automated Quotations) was the world's first electronic stock market. The NASDAQ is an
electronic-based network that links dealers so they can buy and sell securities
electronically rather than in person
198
Name at least two advantages of a company’s issuing
| stock as a form of equity financing.
(1) the stock price never has to be repaid to the stock holders, since they become owners in the company;
(2) there is no legal obligation to pay stock dividends; and
(3) the company incurs no debt, so it may
appear financially stronger
199
Name at least two disadvantages of a company’s issuing
| stock as a form of equity financing.
(1)stockholders become owners of the firm and can affect its management by voting for the
board of directors;
(2) it is more costly to pay dividends since they are paid in after-tax
profits; and
(3) managers may be temped to make stockholders happy in the short term
rather than plan for long-term needs
200
What are the major differences between common stock and preferred
stock?
Holders of common stock have voting rights in the company.
In exchange for having no voting rights, preferred stockholders receive a fixed dividend that must be paid in full
before common stockholders receive a dividend.
Preferred stockholders are also paid back their investment before common stockholders if the company is forced out of
business
201
Why are bonds considered a form of debt financing?
An organization that issues bonds has a legal obligation to make regular interest
payments to investors and to repay the entire bond principle amount at a prescribed
time.
202
What does it mean if a firm issues a 9% debenture bond due in 2025?
The bond is unsecured (has no collateral), has an annual interest rate of 9%, and has a
maturity date of 2025.
203
Explain the difference between an unsecured and secured bond.
Unsecured (debenture) bonds are not supported by any collateral, whereas secured
bonds are backed by tangible assets such as mortgages, buildings, and equipment.
204
Why are convertible bonds attractive to investors?
Convertible bonds can be attractive to investors because common stock value tends to
grow faster than a bond.
205
What is the key advantage of investing through online brokers? What is the
key disadvantage?
One key advantage of investing through online brokers is lower fees, because the
investor does their own research.
The key disadvantage is the lower level of information.
206
What is the primary purpose of diversifying investments?
Diversification means buying several different types of investments (government bond,
corporate bonds, preferred stock, common stock, global stock) with different degrees of
risk. The purpose is to reduce the overall risk an investor would assume by investing in
just one type of security
207
What is a stock split? Why do companies sometimes split their stock?
When a stock splits, stockholders receive two (or more) shares of stock for each share
they own. Each is worth half (or less) of the original share, so while the number of shares
increases, the total value of stockholders' holdings stays the same.
Stockholders hope the lower per-share price that results may increase the demand for stock.
208
What does buying stock on margin mean?
An investor buying on margin borrow part (the percentage allowed to be borrowed is set
by the Federal Reserve) of the cost of a stock from the broker to get shares of stock
without immediately paying the fully price.
209
What are mutual funds and ETFs?
A mutual fund is an organization that buys stocks and bonds and then sells shares in
those securities to the public enabling individuals to invest in many more companies than
they could otherwise afford. Like mutual funds, ETFs are collections of stocks that are
traded on securities exchanges, but they are traded more like individual stocks.
210
What is the key benefit to investors in investing in a mutual fund or ETF?
Mutual funds and ETF-s lower risk by diversifying investments
211
What does the Dow Jones Industrial Average measure? Why is it
important?
The Dow Jones Industrial Average is the average price of 30 specific stocks that
analysts use to track the directions (up or down) of the stock market.
212
Why do the 30 companies comprising the Dow change periodically?
The Dow changes periodically because the market changes.
213
Explain program trading and the problems it can create.
Program trading is when investors give their computers instructions to sell automatically
to avoid potential losses, if the price of their stock dips to a certain point. This can be
problematic because computers malfunction, and if a key computer is turned off,
program trading halts.
214
What is money?
Anything that people generally accept as payment for goods and services
215
What are the five characteristics of useful money?
1. Durability
2. Portability
3. Divisibility
4. Uniformity
5. Limited Supply
6. Acceptability
216
What is the money supply, and why is it important
Money supply is the amount of money the Federal Reserve Bank makes available for
people to buy goods and services.
An increase in the supply of money typically lowers interest rates, which in turn, generates more investment and puts more money in the hands of consumers, thereby stimulating spending benefiting the economy.
The size of the money supply can affect employment and economic growth or decline.
217
How does the Federal Reserve control the money supply?
The Fed controls the money supply primarily through open-market operations: The
purchase of government bonds increases the money supply, and the sale of government
bonds decreases the money supply
218
What are the major functions of the Federal Reserve? What other functions
does it perform?
The Federal Reserve is responsible for creating an environment that fosters stable
prices and full employment. It attempts to manage these two goals with monetary policy.
The Federal Reserve is also responsible for the clearing of checks.
219
Why did the U.S. need a Federal Reserve Bank?
The U.S Federal Reserve was created after a cash shortage problem in 1907.
220
What is the difference between a bank, a savings and loan association, and
a credit union?
Commercial banks are profit seeking organizations that receive deposits from individuals
and corporations in the form checking and savings accounts, and uses those funds to
make loans.
Savings and loan associations are financial institutions that accepts both
deposits but provides home mortgage loans.
Credit unions on the other hand are
nonprofit financial cooperatives that offer the full variety of banking services.
221
What is a consumer finance company?
consumer finance companies provide financing for customers of retail stores or
wholesalers.
222
What is the role of the FDIC
An independent agency of the U.S government that insures bank deposits up to
$250,000
223
How does a debit card differ from a credit card?
A Debit card withdraws funds from a checking account, while a credit card allows you to
spend borrowed money up to a certain limit.
224
What is the World Bank and what does it do?
The World Bank lends most of its money to less developed nations to improve their
productivity and help raise standards of living and quality of life
225
What is the IMF and what does it do
International Monetary Fund (IMF) fosters cooperative monetary policies that stabilize
the exchange of one national currency for another.
