Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
1-41
133. Rob is an emergency room nurse at a local hospital in Texas. On a weekly basis, he will
serve a number of patients who are not legally U.S. citizens. Many of them are giving
birth to babies. Fortunately, Rob speaks enough Spanish to communicate with the patients.
Rob is experiencing the realities of the social environment in some states.
Feedback: There is a sizeable Spanish speaking population that lives in this state. The social
environment in many states and many countries can differ. Both for profit and non-profit
companies must adjust to accommodate for changes in the social environment.
134. Globalization has increased among nations.
135. An important environmental change in the global environment is the growth of
international competition.
136. Improved distribution systems have led to more global trade.
137.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
Global trade has suffered because of increased problems with the Internet.
138. Globalization has greatly increased living standards around the world.
139. China and India have become major U.S. competitors.
140. The threat of terrorism increases the costs of operating most businesses.
141. Wars are costly to all companies.
1-43
142. The war on terrorism has had a significant effect in drawing many resources from the
U.S. economy and led to many additional costs for businesses.
143. In most industries, the only producers that pose a serious threat to U.S. manufacturers are
those in Japan and Western Europe.
Producers in countries like China and India have become major U.S. competitors. For
example, Lenovo, a Chinese firm, recently bought IBM's PC unit.
144. Companies that participate in the defense industry by making weapons and other
companies that make armored vehicles and even food companies do well when the U.S. is
at war.
Feedback: Although wars are quite costly for most companies, there are some whose
revenues and profits grow. These are usually companies with government contracts that
support the war effort.
145.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
One of the problems with globalization is that distribution systems and communication
systems lack efficiency.
Feedback: Distribution systems and Communication systems have improved dramatically,
and have contributed toward world trade.
146. The evidence for climate change is questionable. Well-known U.S. companies are taking
a wait-and-see approach toward addressing climate change.
Feedback: Climate change is a key question on the minds of most companies.
147. Carlos Gonzalez owns a small manufacturing company that makes ventilation systems
used in the construction of office buildings. As the U.S. continues to be involved in wars
around the globe, Carlos may notice that his business will be growing more slowly in the
future as more money continues to be put into the war effort.
Feedback: The war in Iraq has drawn billions of dollars from the American economy. Most
companies have lost workers to the armed forces and have grown more slowly as money has
been diverted to the war effort.
1-47
156.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
1-48
The advice provided by a marriage counselor is an example of the service industry.
157. Almost all of the growth in employment opportunities since the mid-1980s has been
generated by the service sector.
158. Although employment in the service sector has increased rapidly in recent years, the vast
majority of workers are still employed in the goods producing sector.
159. There are more high-paying jobs in the service sector than in the goods-producing sector.
160.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
The best employment strategy for today's college graduates is to search for jobs that are
closely related to their college major.
161. The growth in the service sector in the United States appears to be giving way to an
information-based global era.
162. The transition from an agricultural economy to a manufacturing economy to a service
based economy has resulted in a serious increase in long-term unemployment.
163. One reason given for the decline in the number of U.S. workers employed in
manufacturing is that manufacturing firms in the U.S. have become more efficient.
Feedback: Technology has allowed U.S. workers to be more productive, resulting in the need
for fewer workers. Many American manufacturing firms have downsized because of this
increased efficiency.
1-56
182. Which of the following is the best example of a business whose goal is to earn a profit?
A. A community college
B. The Salvation Army
C. Boy Scouts of America
D. Best Buy, Inc.
Feedback: Best Buy is the only one of the organizations listed which seeks to earn a profit.
All of the others are nonprofit organizations.
183. In order to make an intelligent investment decision, entrepreneurs should:
A. limit their options to those business investments that are backed by the U.S.
government.
B. invest in businesses that have generated a stable rate of profit for at least the past ten
years.
C. invest only in business opportunities where it is possible to take an active role in
management.
D. compare the risks of potential investments to their expected profits and find the right
balance between profit and risk.
Feedback: Those companies with high risk also often possess the potential for high profits.
Entrepreneurs must weigh risk and profit and find the right balance.
184.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
1-57
Companies that outsource research and development and design jobs:
A. have always made a wise decision.
B. will be more profitable in the long run.
C. run the risk of overseas companies using the information to produce competitive
products.
D. always invest in the overseas companies that take on these jobs.
Feedback: Companies have gone from outsourcing production jobs to outsourcing research
and development and design functions. Such outsourcing may prove disastrous to those firms,
in that overseas companies may use the information to produce their own, competitive
products.
185. Honda and Toyota have used insourcing for years to produce cars in the United States.
Insourcing:
A. helps offset the number of jobs being outsourced.
B. increases the number of jobs being outsourced.
C. damages the United States economy.
D. causes jobs to be lost to overseas competitors.
Feedback: Companies including Honda and Toyota have set up design and production
facilities in the United States, called insourcing. Insourcing creates many new jobs, and helps
offset the number of jobs being outsourced. Because insourcing creates jobs it actually helps
the U.S. economy.
186.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
1-58
Public schools, charities and government agencies generally ___________.
A. are incorporated
B. do not seek to earn a profit
C. provide goods rather than services
D. do not have any stakeholders
Feedback: Although schools, charities, and government agencies often provide goods and
services, they do not seek a profit. Therefore, they are nonprofit organizations rather than
businesses.
187. For-profit businesses and nonprofit organizations are similar in that they both:
A. contribute to the welfare of society.
B. seek to earn a profit.
C. have a limited life.
D. must be controlled by a board of directors.
Feedback: A business is an activity that seeks to profit by providing goods and services to
others. Nonprofit organizations, such as charities and government agencies, also provide
goods and services in order to satisfy the needs of people within a society, but they do not
seek a profit.
188.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
1-59
The standard of living for a nation's people depends mainly on:
A. the quality of the natural environment.
B. how much political freedom they have.
C. their income and the prices of the goods and services they buy.
D. the amount of labor and capital available employed in the manufacturing sector.
Feedback: The standard of living of a country refers to the amount of goods and services
people can buy with the money they have.
189. World-class businesses attempt to meet the needs of:
A. their customers, even if it comes at the expense of employees and other stakeholders in
the business.
B. their employees, even if it means shortchanging customers by charging higher prices.
C. all of their stakeholders.
D. exclusively their owners, since they are ultimately the ones who pay the bills.
Feedback: Stakeholders are all of the people affected by a business. World-class firms of the
future will attempt to meet the needs of all of their stakeholders.
190.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
Shelby recently started selling her invention: A bed that looks like it floats in mid- air.
The bed is actually suspended by magnetic forces. Shelby is a(n):
A. arbitrageur.
B. entrepreneur.
C. speculator.
D. account manager.
Feedback: An entrepreneur is a person who assumes the risk of starting a business.
191. Ross wants to invest some money that he just inherited. He found that his bank offers a
savings account paying a guaranteed 3% rate of return. However, he would like to earn a
higher return. Ross should keep in mind that to earn a higher return on his money he:
A. will have to invest overseas.
B. should invest in a business that has a very stable and predictable rate of return.
C. will probably have to accept a higher level of risk.
D. will probably have to engage in illegal activities.
Feedback: Investing in a savings account (certificate of deposit) at a bank entails very little
risk, but earns a relatively small return. Business opportunities that offer the potential for high
profits are often associated with a high level of risk. An investor must weigh the potential
profit of an investment with its risk.
192.
