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Intro to Business Chapter 4,5,6

Corporate __________ covers issues such as setting minority hiring practices, manufacturing safe products, and minimizing pollution.
corporate responsibility
A(n) _________-based ethics code defines corporate values; creates a supportive environment, and, stresses shared accountability among employees.
Integrity-based ethics
Which of the following statements best describes a firm’s commitment to its customers?
Firms that offer real value will develop a competitive advantage and gain customer trust.
A friend offers to share with you a term paper previously prepared for her Introduction to Business class last semester. When you tell her that it wouldn’t be fair, she reminds you of your habit of reading an entire Harry Potter book at the local bookstore without paying for the book. Which ethics-based question would be most helpful in evaluating these situations?
Is it balanced?
Following an ethics-based approach to decision making will normally lead to:
Lower employee turnover.
The position a firm takes on issues that affect the corporation as well as society is known as its:
corporate policy
Enrollment at Tradewinds College has increased by about 3% each year for three years, even though tuition and fees have gone up to help defray the cost of new wind turbines installed on campus to generate enough power to serve the campus buildings and to sell to local business establishments. As a recent student of contemporary corporate social responsibility, you conclude:
students are willing to pay the extra tuition in the short term because they believe that the means (the use of innovative technology) will justify the end (a better environment).
Bernie Madoff’s Ponzi scheme swindled about $65 million from customers who invested with his firm. Enron and WorldCom participated in inappropriate accounting methods. According to the Making Ethical Decisions box:
The notion that the financial system is complicated and difficult to understand often perpetuates these crimes.
While speaking with his sales force, the director of sales explains, “Anyone caught violating a sales law will be fired.” After studying business ethics, you recognize this remark as a reference to the firm’s __________ ethics.
compliance-based
When Donut Plaza employs in-store recycling and composting, and uses nontoxic cleaners, Donut Plaza is participating in:
corporate responsibility
When working with international firms, U.S. businesses:
expect socially responsible behavior from their business partners.
Management’s philosophy at Apple, Inc., has often stated that a fit body contributes to more productivity at work. Apple provides exercise facilities at most of its sites across America, and permits employees to use a half-hour of work time each day to relieve stress through exercise. This serious position on physical fitness is part of Apple’s _________.
corporate policy
A U.S. government official has indicated that for a generous contribution to his reelection fund, he would ignore your firm’s apparent violation of several anti-pollution laws. Which of the following “ethics check questions” would you consider first?
Is it legal?
When it comes to social responsibility, some people feel that “before you can do good, you must do well.” This reflects a firm’s primary responsibility to its:
investors
Determining what is involved for a firm to be socially responsible:
varies even among those who are interested in corporate responsibility.
Which of the following indicates that U.S. businesses are demanding socially responsible behavior from their international suppliers?
The decision of Phillips-Van Heusen to cancel orders from suppliers that violate its ethics code
Top leaders in government and business today are:
held to higher ethical standards than in the past.
In an effort to promote the importance of a valuable education, the faculty and staff at the local community college are trained to ask each student about their career preferences, rather than suggest courses that may not benefit the student’s future goals. Although it would be tempting to suggest courses just to increase the college’s enrollment, employees know that it is more important to serve each student well, even if it means suggesting courses and/or degrees offered at other institutions. This approach is consistent with:
integrity-based ethics
When discussing moral and ethical issues, it is helpful to remember that ethical behavior begins with _________________.
each of us
We describe charitable donations by corporations to nonprofit organizations as ________.
corporate philanthropy
Zach spent several months developing a good relationship with a business client. The client is now buying a significant amount of product from Zach’s company, resulting in high commissions for Zach, personally. After checking the sales records for the past six months, a colleague of Zach’s started visiting the same client in the hopes of capturing some of the client’s business too. Although he considers it “legal and fair game,” sales reps in his firm have begun to avoid him because they consider it a violation of:
integrity-based ethics
Purposefully understating your firm’s income to avoid paying higher taxes is an example of:
illegal behavior
A(n) _______-based ethics code emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers.
compliance-based
The difference between an organization’s positive social contributions and its negative social impacts is called their:
net social contribution.
Given the ethical lapses that are prevalent today in our businesses, which of the following can be done to restore trust in the free-market system and leaders in general?
New laws making accounting records transparent may help restore trust.
If a group of stockholders or management obtain all the stock of a previously publicly traded firm for themselves, this is referred to as:
taking the firm private.
A ____________ is the share of profits or percentage of sales a franchisee pays to a franchisor.
royalty
The difference between a merger and an acquisition is:
a merger is the joining of resources of two companies, whereas an acquisition is a buyout of one firm by the other. The new company concerns itself with merging of resources.
Maria recently purchased 100 shares of stock in Idle Time Gaming, Inc. Maria is a(n) ______________ of this company.
owner
One difference between partnerships and sole proprietorships is that partnerships:
have a greater chance of long-term survival due to the accountability of each partner to the other.
Although sole proprietors do not pay any special taxes, as the owner of the business you are also an employee of the business, which requires you to:
pay self-employment taxes.
Trevor and Tyler own all the stock in the Double T Corporation. The stock of this corporation is not sold to the general public. Trevor and Tyler own a:
closed corporation.
When entering into a new partnership, a good strategy is to:
put the partnership agreement in writing.
One reason franchises have become so popular is that this arrangement provides the franchisee with:
a nationally recognized name and product.
Compared to a sole proprietorship, which of the following is considered an advantage of a general partnership?
Ability to pool financial resources
Mel, Tim, and Bill agreed to partner in a small rehab business. Initially, they were enthusiastic contributors until their first project took more work than Mel initially estimated; Tim wanted morning meetings and long lunch hours; and Bill decided to go on vacation even though the project was not complete and ready to sell. As Figure 5.2 indicates,
it’s smart to begin the partnership with honest communication of what each partner expects to give and get from the partnership.
A(n) ___________ is an arrangement whereby someone with a proven idea for a business sells the rights to use the business model, to sell a product or service to others in a given territory.
franchise agreement
When two firms which do not participate in the same industries, for example, a software company and a fast food restaurant company, decide to merge, the result is called a ____________ merger.
conglomerate
A ___________ is a form of business that is owned, and usually managed, by one person.
sole proprietorship
When comparing general partnerships to sole proprietorships, an advantage of partnerships is that they:
give the firm a stronger financial foundation.
Jamie and Maria invested all their savings in a small pizzeria they opened outside the University of Western Kentucky. They operated the business as a general partnership. After 11 months, the business went broke and Jamie and Maria were left with outstanding bills of $37,500, which was more than their initial investment in the company. Jamie and Maria can:
lose their personal assets as the result of their company’s financial problems.
Which of the following is an advantage of a partnership?
Shared management and pooled skills
Nick wants to start his own business. Nick should consider a sole proprietorship if he:
wants to be his own boss and can accept unlimited liability.
One reason limited liability companies have become so popular is that they:
can be taxed either as a corporation or as a partnership, so owners can choose the tax treatment that is most advantageous for their situation.
Travis has agreed to invest $16,000 in a partnership with his sister and brother-in-law. He does not intend to actively work in the partnership, nor does he wish to risk any of his own assets other than the $16,000 he initially invests. The partnership has agreed to permit him to share in the profits. As an expert on forms of business ownership, you know that Travis is a ______________ in this partnership.
limited partner
The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond:
the amount they have invested in the company.
Greg plans to open up three Hottie Pata¢tee franchises in the greater Denver area. He just informed you that he plans to negotiate with the franchisor to eliminate the Big Potato Head that graces the roof of these restaurants. Greg is likely to learn that:
it is nonnegotiable due to company rules.
Three types of corporate mergers are:
vertical, horizontal, and conglomerate.
One reason many companies do not organize themselves as an S corporation is that this form of business:
has a special eligibility restriction, which many businesses are unable to meet.
Several years ago, Regis Corporation, a very large hair styling salon company, purchased 60 “Your Father’s Mustache” salons. Although this was initially an acquisition, the merging of these two businesses was a(n) __________. Regis went on to purchase several hair care product companies. Joining forces with hair care product companies would represent a ___________.
horizontal merger; vertical merger
Kristen and her brothers and sisters decided to form a partnership that specializes in home design of all types. One of their goals is to maintain the loving relationship they currently enjoy, so they are following the Model Business Corporation Act recommendations as they write the partnership agreement. Which of the following is an accurate recommendation of the Act?
There should be discussion and well-understood ways that the partners will handle disagreements.
Kyra recently quit a job with a large corporation to start her own business. While she realizes that her decision comes with risk, she is excited at the chance to be independent and by the challenges of running her own firm. Kyra is an example of a(n):
entrepreneur.
A business’s size is measured:
in relation to other firms in its industry.
As a result of corporate downsizing, Alex lost his job as an IT manager for a large telecommunications company. A bonafide computer geek in his own right, Alex knew that several of his past company contacts often outsourced their computer problems. He decided it was a good time to test the waters and see if he could secure enough computer clients to be in business for himself. His success demonstrated that:
successful big businesses often create profitable opportunities for small businesses.
Apple’s smart team is an example of a firm that succeeded by:
bringing together a group of talented and experienced managers to conceive, develop, and market products.
Yesterday, on Facebook, one of Sarah’s friends suggested that she spread the word about Mia Bella Boutique, an online company that designs hats and shoes. If Sarah’s efforts generate 25 more people to spread the word, Sarah will receive 30% off her order. Mia Bella is utilizing _____________, an effective strategy for increasing awareness and market share for web-based businesses.
affiliate marketing
Erin developed a new type of exercise equipment she calls the Tush N’ Tone. After unsuccessfully searching for potential investors, she arranged a personal loan and borrowed additional money from her parents. Her willingness to continue believing in her idea and to remain enthusiastic shows that Erin is:
characteristically self-nurturing.
A firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company is called a:
venture capitalist.
Small businesses often have advantages in international markets. One advantage is:
individualized customer service as opposed to impersonal corporate bureaucracies.
After graduation, Manny focused his attention on finding full-time employment. He has decided to narrow his job search to jobs with a major corporation. His job search strategy:
will likely limit his job prospects since most new jobs are with small businesses.
Ben got a phone call from one of his regular customers asking if he had time to repair a couple of broken sprinkler heads on the customer’s underground sprinkling system. Although it was already 6:00 p.m. and Ben had put in a full day of work, he turned his car around and headed for the customer’s house. As a small business owner, Ben demonstrates:
his ability to easily adapt and respond to his customer’s needs.
Christine recently applied for a microloan from the SB. Although several criteria are important, the Small Business Administration’s decision to grant or deny the loan will largely depend upon:
the soundness of her business plan, and her integrity.
Greg benefited from his experience working for an established private company that provided innovative lighting for large music venues. Although confident that he could start his own lighting business, he had limited capital to buy the necessary equipment needed to successfully compete with established companies. Which of the following strategies would best help Greg achieve his goal of business ownership?
Begin by offering to take over management of his employer’s business, allowing the owner to enjoy some leisure time
According to SBA guidelines, a manufacturing firm with 1,000 employees:
may be classified as a small business depending upon the size of other firms in the industry.
A(n) ________________ is a group of experienced professionals from different areas of business who join together to develop, make, and market a new product.
entrepreneurial team
Which of the following suggestions would an experienced business owner offer to help someone who is thinking about starting a business venture?
Gain experience by working for a successful businessperson.
Which of the following explains why individuals accept the risks of business ownership?
The sense of self-satisfaction and independence
Enterprise zones are:
specific locations across the U.S. where entrepreneurs can set up shop and receive tax breaks for operating in these areas.
In order to finance The Shortbread Shack, a mobile bakery business that services several large Silicon Valley companies, Marcy demonstrated her steadfast desire to get her bakery off the ground by visiting several bankers with ___________.
her business plan.
After several years of volunteering to play the piano and sing at a local nursing home, Callie decided the time was right to tap into the growing elder care market. She started Music and Memories, Inc., a nonprofit corporation that would hire local talent to perform her own music productions directed toward this market. In order to write and produce several productions each year, Callie needed start-up funds. An instructor at the local community college suggested that she begin by ____________, because this effort would help introduce her idea to interested investors as well as suggest government grant applications that Callie might pursue.
preparing her business plan
As a high net worth individual, Allison searches for growth firms in need of additional funding to achieve their goals. In return for this __________, Allison expects to assume ownership in the business.
venture capital
Successful small business owners are:
valuable sources for information since you can learn from their experiences.
In order to improve his chances of small business success, Demitri prepared a business plan. Most often, a positive outcome of this exercise is:
the plan enables Demitri to think carefully about all aspects of his business idea.
Which of the following statements explains one of the reasons that people in the U.S. take the entrepreneurial challenge?
It’s about independence and the opportunity to share in the American dream.
Entrepreneurship is:
accepting the risk of starting and running a business.

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