Page 1
1. (TCO 4) Using a company’s existing resources to launch new products and generate new profits is an example of what type of entrepreneur? (Points : 5)
Intrapreneur
2. (TCO 4) Alicia Jones needs help writing her business plan for a new, small pet grooming business. She should visit her local: (Points : 5)
enterprise zone
3. (TCO 4) A key element of business success is: (Points : 5)
Business plan
4. (TCO 4) One of the reasons why people choose to be entrepreneurs is: (Points : 5)
Independence
5. (TCO 4) Which of the following is a benefit to forming a cooperative (or co-op)? (Points : 5)
Members have more economic power as a group than they have as individuals.
6. (TCO 3) Which term describes the most common form of Federal Direct Investment (FDI) (Points : 5)
Multinational Company
7. (TCO 3) Wilson Hardware, a U.S. retailer, buys much of its inventory from Asian countries. Wilson
Hardware would benefit if the value of the dollar ________ relative to the currencies of the countries from which Wilson imports. (Points : 5)
Fell
8. (TCO 3) Which of the following strategies for reaching global markets requires the least amount of commitment? (Points : 5)
Licensing
9. (TCO 2) Legality refers to: (Points : 5)
laws written to protect ourselves from fraud, theft, and violence
10. (TCO 2) Making safe products, minimizing pollution, using energy wisely and providing a safe work environment are examples of what: (Points : 5)
Corporate responsibility
11. (TCO 2) For those who have broken a law, the way to maintain trust in our society and in our leaders ____________ (Points : 5)
Those who have broken a law should be punished accordingly.
12. (TCO 2) One of the manager’s best employees desires to be promoted to a managerial position; however, the owner is grooming his nephew for the job. The owner’s nepotism may hurt a valuable employee’s chances for advancement but complaining may hurt the manager’s chances for promotion. Which question should the manager asks himself to help him make the right ethical decision in this situation? (Points : 5)
What is best for the company?
13. (TCO 1) A foreign organization that sells the rights to use its brand name and operating know-how in return for a lump-sum payment and a share of the profits is an example of: (Points : 5)
Franchising
14. (TCO 1) __________ is the total value of final goods and services produced in a country in a given year. (Points : 5)
Gross Domestic Product (GDP)
15. (TCO 10) In making a business decision as it relates to outsourcing a company’s customer service function versus keeping customer service in house, the area of accounting managers would rely on is: (Points : 5)
Informational Accounting.
1. (TCO 1) A(n) _____________ is a severe recession, usually accompanied by deflation. (Points : 5)
Depression
2. (TCO 9) High productivity can lower the costs of producing goods, but can also lead to ________________. (Points : 5)
Higher wages
3. (TCO 9) Edward, Jacob, and Mike work for the same company, but live in three different cities. They have been asked to collaborate on a project that needs to be completed by the end of the quarter. Since it is nearly the due date, they all need to work on this project at the same time. The best type of software they can use to get this project done is: (Points : 5)
Groupware.
4. (TCO 8) As a marketing manager for Kitch-It-Tools, Jim is frustrated with the way his organization markets its kitchen utensils. Currently, Kitch-It-Tools utilizes a strategy aimed toward everyone relying heavily on random television and radio advertising. Jim complains that the firm is not focused and is confusing current customers through their random approach. Presently, Kitch-It-Tools is NOT utilizing: (Points : 5)
Market segmentation
5. (TCO 10) Brown Inc. has just paid its monthly utility bill. What balance sheet and income statement accounts will this transaction affect? (Points : 5)
Current assets and fixed assets and cost of goods
6. (TCO 6) As firms make greater use of empowerment, managers will find that they: (Points : 5)
Must become more like coaches and counselors than bosses.
7. (TCO 6) Which of the following terms describes the set of values, beliefs, rules, language, and institutions held by a specific group of people? (Points : 5)
Culture
8. (TCO 6) The revolution in management that is currently underway suggests that the most effective managers of the future will: (Points : 5)
Be skilled communicators and team players.
9. (TCO 6) Setting contingency plans in an organization is considered very important today mainly because: (Points : 5)
Conditions change rapidly in today’s economic and competitive environments.
10. (TCO 6) Which of the following is involved in setting work standards and schedules needed to implement the firm’s tactical objectives? (Points : 5)
Operational planning
11. (TCO 7) ________ is a never-ending process of continually improving what a company produces. (Points : 5)
Quality
12. (TCO 5) Which of the following assessments of electronic retailing is most accurate? (Points : 5)
The line between electronic retailing and traditional retailing is blurring as traditional retailers go online.
13. (TCO 10) __________ is the accounting practice of recording every transaction in two places. (Points : 5)
Double-entry bookkeeping
14. (TCO 9) A business would choose to establish an intranet (Points : 5)
To create a private network that only employees can access
15. (TCO 9) An important advantage knowledge technology has over older versions of business technology is that it: (Points : 5)
Delivers timely information directly to the people who need it.
1. (TCO 1) Describe the 3 key economic indicators in the United States? What do they measure? (Points : 20)
Inflation – it is a key indicator for security markets as it determines the amount of the real value that is being lost along with the rate of return that is needed to compensate that loss. Inflation is determined by the output gap (balance between demand and supply in the economy). A actual output which is below potential leads to low inflation. Furthermore, inflation is caused by increased demand for a given product, increase in cost of supplies, limited supplies, and fear for future low supply (Bauhmol & Blinder, 2011). A CPI figure is given every month by the Labor Department where the increase in price of particular basket of goods and services bought by the average consumer is measured. The percentage increase of the price of the given goods or services in one year as compared to the previous year is the inflation rate.
Gross domestic product (GDP) – refers to the dollar value all goods and services that are produced by the country during a given period of time. It is reached to either through addition of all the income earned in the economy or all the spending incurred. When compared against the reading of the previous year, the GDP shows how fast the economy is contracting or growing.
The Labor Market – by evaluating the employment and the unemployment rate, the US is able to access the state of its economy. The US Department of Labor publishes the Employment Report on monthly basis which gives both the employment and unemployment rates. US citizens already working are the employed while those job-seeking are the unemployed. However, the unemployment rate excludes those without jobs but not searching for them such as students and retirees. A change on the allocation of resources in the economy on the basis of what people are purchasing leaves some companies without business while those with the good and services in high demand expand rapidly.
Inflation, GDP, and labor market date all exert a key influence on the stock market which is a significant element of the US economy. All the three factors are closely interrelated meaning that a modification in any one of them has a significant trickle-down effect on the others.
2. (TCO 10) Explain the purpose of financial statement analysis. Provide an explanation of each one of the four types of ratios and what it represents (why is it calculated and how is it used for financial analysis). (Points : 20)
A financial statement analysis serves the purpose of examining the past and current financial information so as to enable evaluation of a company’s performance and financial standing as well reach estimations on future risks and potentials. It draws information on the company’s Balance Sheet, Income Statement, and Cash Flow Statement to give valuable data about trends and relationships, the quality of the earnings, and the strengths and weaknesses of the company’s financial position (Kesavan, 2005). Financial statement ratios are extra tools used in analysis of financial statements. The ratios are classified into four:
i) Liquidity ratios – they are used to measure the ability of the company to repay its debts when they mature. Typically the higher the value of the liquidity ration the greater the margin of security the company has to cover its short term debts. They include the current ration the operating cash flow ratio and the quick ratio. Liquidity ratios are calculated because the ability of the company to transform short-term assets into cash to cover its debts is of given much consideration by creditors when seeking payment.
ii) Activity (turnover) ratios – used in financial statement analysis to measure the efficiency or effectiveness of the company is utilization of the assets at its disposal. They show the speed at which the assets are turned over or converted into sales. They include Stock. Debtors. Creditors and Working capital turnover ratios.
iii) Profitability ratios – used to measure the success of the company’s management in the generation of returns for the providers of the capital of the company. It is an indication that the company is healthy if it majority of its profitability ratios are higher than those of a key competitor or equal from a previous period. Examples include: profit margin return on equity and return on assets.
iv) Coverage ratios – used in financial statement analysis to ascertain the protection for both the long-term creditors and investors. Generally a higher coverage ratio indicates better capability of the company to meet its obligations to the lenders. Analysts and investors also study the trend of coverage over spread over time to establish he change in the financial standing of the company (Kesavan, 2005). Examples of coverage ratios are Interest Debt service and the asset coverage ratios.
3. (TCO 6) List and describe the three commonly recognized leadership styles. (Points : 20)
i) Autocratic leadership style – an extreme sort of leadership where the leader holds much power over his/her subjects. The manager does not consult the staff or citizens and thus they do not give any suggestions but must obey orders without questioning. Leaders use threats and punishments over the staff. However it sometimes most effective when new recruits lack knowledge on the tasks to be performed and when the effective supervision is offered solely through detailed instructions and orders.
ii) Bureaucratic leadership – leaders work “by the book” where everything follows set-out procedures or policies. Most effective style for tasks involving serious safety risks (e.g. working with machinery toxic substances or at heights) or where significant amounts of money are involved. However it is ineffective when staff lose their interest in their co-workers and in their jobs and staff does only what is spelled out and nothing more.
iii) Democratic leadership style – it is also called the participative style because staff are encouraged to contribute to the decision-making. The leader has the final take on matters but asks for the input of others first. The leader strives to keep the staff employed regarding everything affecting their work besides sharing the problem-solving responsibilities.
4. (TCO 3) What is free trade? Discuss the pros and cons of free trade? (Points : 20)
Free trade refers to a policy where a government does not interfere with exports or discriminate against imports through application of tariffs or subsidies or quotas (Ehmke et al, nd). The policy affords trading partners the mutual gains from trade in accordance with the law of Comparative Advantage. Free trade has its pros and cons.
Advantages
i) Increased Production – countries are able to specialize in commodities of which they have comparative advantage over. As such they do take advantage of efficiencies provided by economies of scale together with increased output. In addition there’s lower average cost increased productivity leading to increased productivity of the increased size of market.
ii) Production efficiencies – free trade boosts the efficiency of resource allocation leading to increased productivity and higher total domestic output of goods and services. Further there is increased competition encourages innovative production methods and marketing and distribution methods using new technology.
iii) Benefits to consumers – free trades makes available a greater variety of goods and services to choose from at lower prices because of increased competition.
iv) Foreign exchange benefits – free trade is a source of hard currency which boost the economy of the countries involved.
Disadvantages
i) Economic dependence – free trade brings economic dependence on other nations for supply of specific products and services which could particularly dangerous during times when relations are not so good.
ii) Dumping – free trade often results in cutthroat competition and dumping where goods are offered at very cheap prices below their production cost so as to capture the international markets.
iii) Non-cooperative countries – some countries in free trade may opt to gain more by introducing import restrictions disrupting the initial smooth cooperation.
5. (TCO 8) Identify and describe the four Ps of marketing. Explain why each is important. (Points : 20)
The four P’s of marketing are Product Price Promotion and Place.
i) Product – refers to a tangible good or intangible service offered to customers. In marketing the right product is one that satisfies the needs of the target customer. Marketers must research the likely life-cycle of a product and the various challenges of each stage.
ii) Price – it is the amount of money a customer pays for a product. The selection of the pricing strategy should be based on the product itself customer-demand other products offered and the competitive environment.
iii) Promotion – refers to all the elements of communication a marketer can use to provide information to different target groups about the product (Ehmke et al, nd). The aim of promotion is have customers understand what the product is its use and its necessity.
iv) Place – it is the distribution channels used by marketers to avail the product to the customers such as intensive distribution exclusive distribution selective distribution and franchising at locations convenient to customers.
References:
Bauhmol, J. William, & Blinder, S. Alan. (2011). Macroeconomics: Principles & Policy. Connecticut, Cengage Learning.
Ehmke, Cole, Fulton, Joan & Lusk, Jayson. (nd). Marketing’s Four P’s: First Steps for New Entrepreneurs. Retrieved from: http://www.extension.purdue.edu/extmedia/ec/ec-730.pdf
Kesavan. (2005). Engineering Economics and Financial Accounting. Delhi, Firewall Media.
