Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-81
Jay and Jim Spears own a lawn irrigation system business. They perform installations and
maintenance of these systems. Several of their customers are golf courses, but they serve a
large group of residential customers as well. When they started the business ten years ago,
they made a pact to always operate within the legal limits of the law, but lately, the
competition is eating them alive. Local competitors have hired illegal immigrants to
perform the manual labor. They do not pay taxes on these employees – they just pay them
in cash at the end of the week. Employment taxes are a burden for small businesses. Jay
and Jim do not want to hire illegal workers. There’s a risk if you permit an illegal worker
to drive a truck; or, if he/she has an accident on the job. You have just studied business
ethics in your class. You inform this partnership that:
A. Taxes only need to be paid for the owners.
B. They are not only taking a chance that a bigger problem may occur, they are indirectly
setting the ethics code for their firm.
C. Small businesses may not be able to worry about ethics codes. These types of
documents are better suited for big business.
D. It is not unethical to try to better the lives of others. Everyone needs jobs.
Feedback: As the student will read in Chapter 4, management’s business ethics sets the tone
for the company’s value system. Corruption and illegal activities at some companies do
negatively affect the business community as a whole. The capitalist system relies heavily on
honesty, integrity, and high ethical standards.
Answer: B
Page: 14
AACSB: Ethics
Bloom’s: Application
Learning Goal: 01-3
Level of Difficulty 3: Application of principles
Topic: Making Ethical Decisions box
232. The Internet and the emergence of an information-based economy are important parts of
the ___________ environment in which businesses operate.
A. economic and legal
B. technological
C. competitive
D. global
1-86
245. One advantage of a database is:
A. it permits a retail store to directly gather information on the customers who do business
with its competitors, so it can target promotional materials to those people.
B. it creates efficiency in that the store can quickly replenish items that are purchased.
C. it prevents identity theft.
D. it prevents stores from exchanging customer information with each other.
246. Which of the following is an advantage of utilizing technology?
A. Technology increases the cost of production.
B. Technology reduces the need for a marketing plan.
C. Productivity increases.
D. Management becomes isolated from the demands of stakeholders.
Technology is everything from phones to software programs that make businesses more
efficient and productive. Productivity is the amount of output you generate given the amount
of input.
247.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
Which of the following best describes the main difference between B2B and B2C
transactions? B2B transactions:
A. involve transactions where the buyers and sellers are both businesses, while B2C
involves transactions between businesses and consumers.
B. focus on financial transactions while B2C e-commerce focuses on the sale of
manufactured goods.
C. refer to business between nonprofit organizations while B2C e-commerce is carried out
by business firms seeking to earn a profit.
D. involve sales in foreign markets while B2C e-commerce is restricted to domestic
markets.
Feedback: B2B stands for business-to-business and B2C stands for business-to-consumer.
248. In recent years, businesses in general have experienced a lasting impact due to the
emergence of _____________.
A. motor-related technologies
B. technologies related to brain studies
C. counterfeit technologies
D. information technologies
Feedback: Tools and machines developed throughout history have changed the technological
environment. Information technology benefits workers in all industries and provides
businesses with the ability to be more responsive to customer needs.
1-88
249. According to the Social Media in Business box, mega-retailer JCPenney is aggressively
addressing changes in the social environment to reach its customers. Which of the
following statements best expands upon strategies that this company recently acted upon?
A. JCPenney spent promotional dollars on ads during the Super Bowl and World Cup to
target the Millennial generation. It plans to constantly sponsor global events broadcast
through traditional media.
B. JCPenney argued that it is a traditional company with traditional values, so it refused to
be forward thinking about joining the YouTube generation when it comes to promoting its
clothing lines. In order to attract its loyal market, it agreed to continue to reach them in the
same way as in the past.
C. Realizing that the stores were looking outdated, JCPenney strategized to put more
marketing dollars into revamping the look of its stores, and less money on advertising. It
was confident that it would reach the 18-24-year-old market because this group spends
more time in the store than online.
D. Addressing the surge in interactive media such as blogs and social media sites,
JCPenney created a promotional campaign featuring well-known fashion bloggers. It was
the only retail sponsor for the Oscars; and it launched a sweepstakes on its Facebook™
page.
Feedback: JCPenney has embraced the fact that the Millennial generation is receiving
information through new forms of media. The company is interacting with its customers
through blogs, social media sites, and other ways that make its promotional campaigns
interactive. It asked well-known fashion bloggers to select their favorite clothes from
JCPenney, and then used these styles in promotional ads.
250.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
Ntercon is an Internet-based company that provides online support services for businesses
that need help in setting up and maintaining their websites. Ntercon is an example of a
company that is engaged in:
A. B2C e-commerce.
B. N2Y e-commerce.
C. Y2K e-commerce.
D. B2B e-commerce.
Feedback: Since Ntercon is providing services to other businesses over the Internet, it is
engaging in business-to-business (B2B) transactions.
251. Life of Luxury, Inc., is a mail order firm that specializes in expensive and unusual gifts
for all occasions. The company keeps a large file of information on all of its regular
customers, including names, addresses, type of gifts they have ordered in the past, and the
size and frequency of their orders. The electronic file which stores this information is
a(n):
A. spreadsheet.
B. MP3 file.
C. PERT file.
D. database.
Feedback: A database is an electronic storage file where information is kept.
1-93
258.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
Opportunities and advancements in the technological environment during the past 20
years have opened the doors for a number of Internet and telecommunications products
that enhance the lives of consumers. Identity theft and other forms of cybercrime are also
by-products of these technological advancements. Which of the following statements
describes a form of identity theft?
A. Cell phone applications that permit the consumer to price compare by scanning the
barcode of a product, such as a DVD.
B. Hacking into a business’s database to obtain customer credit card numbers, and then
selling those numbers to others for use.
C. Navigation technology that permits you to find the exact location of a person, by
entering that person’s cell phone number into your application.
D. The application of “cookies” to a consumer’s computer system that identifies his/her
purchasing patterns.
Feedback: It is a criminal offense to participate in unauthorized entry into a company’s
private (internal) database, where sensitive information, such as credit card numbers, is
stored.
259. Andy Blake got a call yesterday from Planet Bank, the company that issued his credit
card inquiring about an $85.00 charge made in Caracas, Venezuela. Upon learning that
Andy had not made this purchase, the Bank quickly took steps to cancel the card and issue
a new one. Given the circumstances that Andy’s credit card number had an illegal
transaction, Andy may also want to:
A. Check his computer’s firewall to make sure its working.
B. Cancel his account with Planet Bank, altogether and eliminate credit cards from his
life.
C. Check his credit report.
D. Diversify his spending habits by using one of several credit cards when making
purchases.
Feedback: Checking your credit report is an important step in preventing identity theft.
1-95
260.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-96
In today’s competitive environment, good value means:
A. making products with zero defects.
B. superior quality that translates into durable products
C. offering the latest trends without seeming like you are over the top.
D. providing quality products and services at competitive prices.
261. Successful businesses are keenly focused on their:
A. customers.
B. managers.
C. creditors.
D. bureaucrats.
262. Empowerment means:
A. giving employees the authority to make decisions.
B. making certain that employees always defer to management when making decisions.
C. hiring employees that do not require training due to the costly nature of this activity.
D. asking employees to write the policies which govern their jobs.
263.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-97
Empowerment requires that managers focus more on __________ lower-level
employees.
A. directly supervising
B. training
C. simplifying the jobs of
D. controlling and correcting
264. To implement a policy of empowerment, the organization will restructure so that:
A. managers have more responsibility and employees learn to follow directions.
B. employees assume more responsibility.
C. workers agree to work overtime without extra pay.
D. an entire level of management is removed from the organization.
Feedback: Empowering employees leads to developing entirely new organization structures
to meet the changing needs of customers and employees. It may take years to restructure an
organization so that managers are willing to give up some of their authority and employees
are willing to assume more responsibility.
265.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
Which of the following statements about the competitive environment is most accurate?
A. Firms that produce a quality product will almost always succeed in the competitive
marketplace.
B. Traditional firms will be unable to successfully compete against the new Internet firms
unless they immediately create a way to reach customers through this technology.
C. Firms that empower their employees will continue to perform poorly in the competitive
environment.
D. Companies now have to offer both high-quality products and outstanding service at
competitive prices.
Feedback: Companies now have to offer both high-quality products and outstanding service
at competitive prices (value).
266. In order to compete well and gain market share, contemporary businesses are changing to
be more _________________.
A. customer-driven
B. cash-driven
C. management-driven
D. production-driven
Feedback: Competition among businesses has never been greater. The nature of the
competitive environment has encouraged businesses to offer high quality products and
outstanding service. The goal is to be customer-driven.
