F.O.B. UNF 2016

Zack sells organic tacos out of a truck parked on an Ivy League college campus. It’s a one-person operation, but the business is quite successful. Zack believes it’s important for business to benefit society. Given his current operation, what is the best way for Zack to do this?
donate unsold food to a homeless shelter
Experts say that the first law of business is to take care of what group?
customers
In recent years, the Internet search company Google has observed with increasing concern the phenomenal growth of social networking and online messaging companies such as Facebook and Twitter. In 2010, Google introduced a social networking, blogging, and messaging tool called Buzz that was intended to directly compete with other social networking sites. Google claimed that its Buzz offered a number of advantages over competitive sites, such as no character limit on messages and a way to mine one’s email to quickly build networks of friends. Despite its touted advantages, by November 2011 Buzz had failed to take off with consumers, and Google was considering whether to discontinue the service. According to a Google vice president, “During the initial development of Buzz, a high percentage of our R&D budget focused on creating unique features. If we scaled back those efforts and instead focused on issues relating to privacy concerns, Buzz could be successful and even recoup our initial investment.” According to a Google marketing executive, “Google devoted so many tens of millions of dollars to developing and launching Buzz that the fact that it has not succeeded is proof that Google’s users cannot ever be persuaded to turn to Google for social networking purposes.”
It fails to account for the possibility that something other than developmental and launching costs were most crucial to Buzz’s success or failure.
Cathy is a one-woman dynamo. She knows her idea for in-home cupcake decorating parties will be a smash. With her energy, personality, and creativity, she’s sure this will make her rich. What should Cathy step back and consider first for her business if she wants to build wealth?
factors of production
Last year, Carmela’s florist shop had higher expenses than revenues. Which of the following must be true?
The florist shop posted a loss for last year.
Fernandes: We should replace Embracing Diversity, our diversity training program, with a more modern program. I have polled a large number of people who were selected for the program and found that most viewed it negatively, and a substantial number thought that it was a complete waste of time. A new program should focus more on uncovering unconscious prejudices instead of spending so much time explaining that prejudice is wrong.

Murray: The Embracing Diversity training program has been providing results for years. It is comprehensive, with 15 different two-hour sessions. Participation is voluntary, and so I don’t know how anyone could claim that it is wasting their time. Any participant who is not getting value from the program can stop coming. But if participants do not like the program, they have a strange way of showing it: Our records show very few negative evaluations of the program.

Which of the following is the point at issue between Fernandes and Murray?

Should the organization continue to offer Embracing Diversity?
Most affluent households in America are headed by business owners. The self-employed account for what proportion of this group?
two-thirds
Tarnopol Learning Services (TLS) offers tutoring to high school students, college students, and adults returning to school. TLS’s major product offerings include academic tutoring, standardized test preparation, and admissions consulting. Demand for standardized test preparation, which accounts for the majority of TLS’s revenues, peaks before the most popular test dates. Demand for admissions consulting peaks late in the year, just before application deadlines. Demand for tutoring services varies less than demand for other TLS services, but it is highest near the end of academic semesters. Staff shortages during these times have been a persistent problem. In response, TLS is considering whether to 1) recruit and train a greater number of temporary workers during peak demand times; or 2) partner with a tutoring and testing outsourcing firm that would provide services to TLS customers using the TLS brand.

In making the decision between hiring a greater number of temporary workers and partnering with a tutoring and testing outsourcing firm, all of the following questions would be relevant EXCEPT which one?

Would TLS have any staff shortages if it limited itself to offering academic tutoring?
Cities and states constantly offer tax incentives to entice businesses to relocate or build facilities in their region. What forces are working here to influence the business environment?
economic
Parallel Beauty Salon has been open in a small town in North Carolina for a little over one year. Entrepreneurs and business partners Betsy and Frieda are pleased with the fact that the salon has survived its first year, and they would like to see their business grow financially. After careful contemplation, they are considering making several changes to how they run the salon. They believe that expanding business hours to include an extra two hours in the morning during the week, providing a mini-snack bar, and including a childcare service will help to expand their customer base.

Which of the following, if true, undermines the argument that Parallel Beauty Salon should expand its hours as well as include a snack bar and a childcare service for its customers?

The expenses incurred by opening earlier and running a mini-snack bar and a childcare service would equal the amount of money brought in by having additional customers.
Which of the following is NOT an argument in favor of corporate social responsibility (CSR)?
Business provides sufficient social value by creating jobs.
Steve Beatty, the head salesperson of a computer company, contracts with a supplier for technical equipment. Just before the winter holiday, a greeting card comes to his home address from the president of the supplier. In it, he finds a Best Buy gift card worth $500, with a note that says, “Go buy some toys for the kids.” His children are excited because they had been looking forward to getting some newly released video game equipment.

Beatty looks at his firm’s formal code of ethics and finds that employees are cautioned not to receive gifts from suppliers for their own personal use. It does not specifically say that gifts for family members are included. He decides to keep the card.

Which of the following, if true, strengthens Beatty’s ethical position?

The president of the supplier is Beatty’s father-in-law, so the gift is a personal one for his grandchildren.
What does employee fraud cost companies out of their earnings?
5 percent
Which of the following is LEAST likely to give a business a competitive advantage?
appealing ethics regulations
Tayshaun has noticed accounting irregularities in his company’s quarterly reports. Significant expenses are missing, making the company look highly profitable despite a dismal economy. After doing more research, he reports this to the state attorney general’s office. What is the term applicable to Tayshaun?
whistleblower
Luisa runs a fleet of taxis. The company is being pressured by interest groups that believe it does not respect the environment. Luisa has shared anecdotal stories with group reps about the company’s pro-environmental activities, but they aren’t buying it. How might she best convince them that the company is already environmentally responsible?
conduct a social audit
The mobile phone company BrightLine is introducing a new smartphone model six months after the release of its previous model. The new release will make the older model unusable with the mobile carrier with whom the company has an exclusive contract.
BrightLine made business decisions without regard for their impact on consumers and the world.
When Mario was hired at a software company, he had to sign a nondisclosure agreement. Nondisclosure agreements are an example of what?
compliance-based ethics codes
A firm is considering opening a new plant in an existing building at a business park. It is located in the middle of a coal-producing region, which remains visibly blighted by the effects of strip mining. The plant’s heating system is based on coal heat, which is locally produced and relatively cheap, reducing the plant’s operating expenses significantly.

Company engineers note that the plant’s roof is ideal for solar panels, which would reduce the firm’s future dependence on coal, nuclear, and other conventional sources of energy. However, the cost of installing the panels is considerable and would mean that the new plant would not return a profit to the company for several years.

The CEO feels that the panels should be installed.

Which of the following, if true, strengthens the ethical standing of the CEO’s position?

The commitment to “green” and sustainable energy use would lower the company’s emissions locally as well as support the development of an alternative power industry.
Tim works at a fast-food restaurant and suspects that a coworker may be misreporting his hours worked. Yet one of the stated values of the company is team unity and cohesion, and Tim is afraid that reporting the misreported hours may cause his coworkers to have a poor opinion of him. What is this situation called?
ethical dilemma
If a new drug to cure cancer could be manufactured from the sap of a tree that only grew in a specific microclimate in Morocco, what would that country have relative to all other countries?
absolute advantage
In 2012, U.S.-based Wal-Mart received approval to merge with Massmart, a discount retailer in South Africa. This action further solidifies Wal-Mart as what type of entity?
multinational corporation
Gizmo Sprockets is a successful U.S. distributor of home appliance parts. Having been in business for more than ten years, it has contracts with thousands of retailers and repair shops throughout the country. The CEO wants Gizmo to go international, opening some locations in large economies such Brazil and India. He thinks that since the principles of how people do business in a free market are essentially the same anywhere, the expansion of Gizmo’s business into other countries should be fairly straightforward. In other words, because the company has been successful in the United States, it will also be successful in international markets.

Which of the following, if true, most weakens the CEO’s argument?

International business ventures carry inherent risks that are not present in domestic business.
Zebra Networking is a U.S. company that sells networking hardware, mostly to small businesses. The CEO of the company wants its sales force to try to open accounts in other countries so that it can begin selling its product internationally.

Zebra’s chief operating officer is concerned about the ramifications of this business move. She thinks that Zebra Networking will have to open production and R&D facilities in the countries in which the company does business. Which of the following, if true, strengthens her argument?

Zebra’s products will have to be tailored to fit the hardware and legal requirements of the countries in which they are sold.
Which of the following has NOT played a crucial role in the development of globalization?
sustainability
How does the rise of international business most benefit small companies?
They can get started more quickly.
Which of the following is NOT a method that countries use to limit the import of goods and services?
floating exchange rates
The rising value of the Canadian dollar relative to the U.S. dollar affects numerous individuals, firms, and markets in both countries. Canada’s economy is export-oriented, most of which is to the United States. A Canadian CEO says, “Canada could lose 150,000 jobs due to declining exports. Canadian retailers in border towns are losing customers to American shops. The Retail Council of Canada believes that the rise in the number of Canadians heading south to take advantage of now-cheaper American goods has trimmed retail sales in Canada by 5 percent. Many Canadian retailers have slashed prices, but these price cuts harm their profit margins.”

Which of the following conclusions is best supported by the CEO’s statement?

The higher the value of the Canadian dollar, the fewer Americans are likely to shop in Canada for lower prices.
DynaTech is a large manufacturer of sporting equipment based in the United States. It has a successful production process and distributes to retailers all over the country. Its CEO is initiating a push for it to become multinational. She wants DynaTech to set up production facilities in other countries to produce and distribute sporting goods for sports that are popular in the host countries.

DynaTech’s chief marketing officer argues that becoming an international company is an unwarranted move for DynaTech because it does not have to do so to maintain superiority over its competition. Which of the following, if true, most weakens his argument?

Many companies succeed internationally after taking the initiative to globalize.
The Greenmax beverage company has built a successful business in the United States, having secured a small but consistent slice of the energy drink market. The company is preparing to go global with its brand and market its product overseas.

Greenmax’s CEO argues that international sales are vitally needed for the company to grow its market. Which of the following, if true, best supports her position?

Greenmax has not been able to significantly grow its market share in the United States past a certain point.
A small business can fail for many reasons. Which of the following reasons involves financial penalties?
failure to file appropriate paperwork
Short and Shearer are two friends who want to begin an entrepreneurship as business partners. They need to decide whether to start up a new business or to buy an existing business. To do this, Short and Shearer need to weigh the pros and cons of each strategy in order to see which is the best strategy for them.

Which of the following, if true, strengthens the case for Short and Shearer buying an existing business?

An existing business would have an existing customer base that Short and Shearer would inherit.
Lola’s Soft Drinks is a startup soda pop company that produces kitschy flavors like pineapple and jalapeño. The small company’s competitive advantage rests in its owners’ narrative: A few college friends liked to get together on weekends and make homemade soft drinks. During their senior year, the friends learned about bottling and sold cases of soda to fellow students. Sales exceeded expectations, and Lola’s Soft Drinks was born. All of the original owners still work hands-on at the soda factory.

Now that all of the owners of Lola’s Soft Drinks have started families, some of them want to hire more staff to reduce their personal workload and to take on roles that focus on being executives and overseers rather than the hands-on roles they fill right now. However, one of the owners, Huan, thinks this is a bad idea. The soda company is based on the image of young entrepreneurs making their own product and personally selling it to the customers. According to Huan, if they let a staff of workers take over the operation of their business, Lola’s will be no different from the many other soft drink companies in their industry and will lose its unique niche.

Which of the following, if true, weakens Huan’s argument?

No other companies produce the same flavors as Lola’s Soft Drinks.
Which of the following would be LEAST interested in building a high-growth business?
micropreneur
An entrepreneur, Christina Rossini, is planning to open a small chain of 4 to 6 pizza stores under the brand name Redenda Pizza. The name comes from combining the first names of the entrepreneur’s grandparents. Christina wants to have a competitive advantage by offering innovative and distinct specialty pizzas and by offering the freshest ingredients. However, she is concerned that without proper planning, her venture will not be successful.

Answers to which of the following questions are LEAST relevant to determining whether Christina has located a good opportunity in starting Redenda Pizza?

Do the planned locations of the restaurant have competitive rents?
Many companies start as nichers to get a foothold against larger competitors and then grow into broader competitors. Enterprise Rent-A-Car began by building a network of neighborhood offices rather than competing with Hertz and Avis in airport locations. Enterprise is now the nation’s largest car rental company.

Which of the following is best supported by the statements above?

A company’s initial goals do not place limits on its long-term success.
One of the cardinal rules of business is that the customer is always right. Which of the following business activities is NOT associated with this philosophy?
implement economies of scale
TestPrepWizard.com is a new test preparation company that offers online products and services helping students do their best on college and graduate school entrance exams. Awareness of the company is currently quite low. TestPrepWizard.com needs to decide which customers to serve. The company has decided to focus on high-end private tutoring services delivered over the Internet.

Which of the following, if true, best supports TestPrepWizard.com’s decision to focus on high-end private tutoring services?

A significant proportion of the people interested in private tutoring to help them prepare for tests live far from tutors capable of providing high-end service.
Village Inn is a locally owned family-style restaurant in a well-travelled area, but it has experienced steadily declining business. Surveys indicate dissatisfaction with the quality of the food compared to similar restaurants within easy driving distance. The restaurant’s owner considers hiring a head chef from one of his competitors but determines that the balance sheet of the restaurant would better support hiring a less experienced but highly talented applicant.

Given the restaurant’s likely clientele, he wants a chef who is skilled at preparing meals that appeal to customers who expect a satisfying but unadventurous bill of fare. Yet, at the same time, he hopes for someone who will find ways to make Village Inn’s food seem “special good” without introducing flavors or dishes that might challenge the palates of regular patrons and their friends. In addition, he wants a chef with some supervisory experience who will take charge of the increased number of part-time cooks and servers that the restaurant hired for peak times and seasons.

Given the owner’s priorities, which of the following, if true, most clearly justifies posting a job description on a local Internet job board as the most effective first step?

The restaurant is located in an area served by a community college with a popular culinary arts program.
Which of the following is NOT a common reason that small businesses fail?
lack of access to technology
Which of the following activities is a part of the planning function of management?
developing strategy
Consider this statement: As the importance of a decision increases, the amount of necessary fact gathering increases. Past a certain point, however, additional fact gathering is not wise. Which of the following sentences is most strongly supported by this statement?
Delaying a decision could make a problem worse and rarely results in a better decision.
Since the mid-1980s, Disney’s strategic planning group turned the company into a huge and diverse collection of media and entertainment businesses. The sprawling Disney grew to include everything from theme resorts and film studios to media networks, consumer products, and a cruise line. The newly transformed Disney company proved hard to manage and performed unevenly. Recently, Disney disbanded the centralized strategic planning unit, decentralizing its functions to Disney division managers. Since then, Disney’s management has helped it perform strongly in a competitive marketplace.

A strategic manager at Disney believes that the video-on-demand unit should be sold because the return it has made on Disney’s investment has been below Disney’s standards. Which of the following, if true, most weakens the strategic manager’s conclusion?

Video-on-demand is gaining in popularity over other methods of viewing videos.
Product Director: We need to pick the best manager for the Prensabi software project. The project involves the latest technology and is very complicated. For example, this project uses a technology called Stage, which is a motion-capture technique that does not require actors to wear specialized gear to record their movements. Since this is a technical project that requires strong technical skills, we should pick the manager with the strongest technical skills.

Executive: The manager needs some familiarity with the technology, but he or she won’t actually be writing the software code. The bigger challenge here is to analyze the goals of the project and make sure that it is being developed according to a strong overall vision. That’s why we should insist that the manager has outstanding conceptual skills.

The product director and the executive are most likely to disagree about which of the following questions?

Would it be a mistake to choose the manager with the strongest technical skills if that manager has weak conceptual skills?
Which of the following activities is an important part of controlling?
measuring performance
Which of the following statements is often true of a team characterized by group think?
Team members have a set of familiar ideas and work with the same set of unspoken assumptions.
Some say there are almost as many definitions of leadership as there are people who have tried to define the concept. Although different definitions sound similar, they have important differences. Compare and contrast these definitions, for example:

Alistair: A leader is someone who can influence others and who has managerial authority.

Bentham: Leaders have the ability to influence a group toward the achievement of a vision or set of goals.

Cooke: Leaders exercise influence and control over other members to help a group or organization achieve the organization’s goals.

Which of the following would be a leader according to Bentham’s definition of leadership but would NOT be a leader according to Alistair’s definition of leadership?

a blogger with a wide audience who is effective at convincing others to adopt her political opinions
Javier has had great success as a manager, leading the information technology department of a large corporation. His success has been attributed to his ability to create clear tactical plans that aid in executing the organization’s strategic vision. What type of manager is Javier?
a middle manager
Business Consultant: Our analysis of managerial effectiveness reveals that the skill sets of managers play a vital role in the success of the organization. It is especially important that the skills that entry-level managers have match those required to actually perform their job. Every entry-level manager who received an unsatisfactory rating was found to lack some of these required skills. Since the entry-level positions in this organization require technical skills, I recommend that the selection process for entry-level managers focus on ensuring that candidates have the technical skills required for entry-level positions.

Which of the following does the business consultant assume?

The managers will not need different skills for the different jobs they take as their careers develop.
Kohler makes and markets familiar kitchen and bathroom fixtures, but it also offers a breadth of other products and services, including furniture, tile and stone, and even small engines and backup power systems. It also owns resorts and spas. Kohler ties this diverse product portfolio together under the mission of “contributing to a higher level of gracious living for those who are touched by our products and services.” Kohler’s overall objective is to build profitable customer relationships by developing efficient yet beautiful products that embrace the “essence of gracious living.”

If Kohler became known as a provider of products and services that embrace the “essence of gracious living,” which of the following would be the most likely result?

Customers who had a positive experience with some of Kohler’s products would be more interested in trying other Kohler products.
Which of the following is NOT one of the five types of divisional structures?
functional
Shopper’s Pride, a regionally based grocery chain with 80 locations, has been losing ground in sales to national businesses that are able to more deeply discount brand products. Ten locations, scattered around the market area and with no clear demographic similarities, show the sharpest decline in sales. The business’s CEO plans to propose a major restructuring of the chain, with the goal of winning back some or all of its former customer base. As part of the planning process, the senior VP in charge of human resources conducts a series of surveys at the ten Shopper’s Pride locations with the sharpest declines.

Which of these survey conclusions, if true, indicates a need to retrain employees at these locations?

Customers felt that checkout clerks and other personnel were “frequently” impersonal or unhelpful.
Retepson, Inc. has been in business for over 50 years. Retepson is best known for its Guide to Colleges line of books designed for high school students seeking admission to undergraduate programs. Basic information about a program is included in the books at no charge to the colleges, but colleges may purchase additional advertising space in the books for a fee. Traditionally, Retepson has made money by selling advertising in its books and by charging students for the books themselves. Recently, however, profits are down, and the company is considering whether it needs to change its corporate culture.

Which of the following, if true, supports the conclusion that Retepson’s culture should emphasize innovation?

Anyone with Internet access can find any of the information included in the Guide to Colleges series.
Which of the following is a drawback of having a narrow span of control?
less employee freedom to make decisions
Which of the following is a benefit of centralization?
less duplication of effort
Crescendo Inc. distributes musical and band instruments nationwide. Reductions in high school musical programs and the economic recession have led to a sharp downturn in sales. Because of this, a salary freeze has been in effect for three years, and increases in health care premiums and co-pays have cut into workers’ take-home pay. Nevertheless, the firm has avoided layoffs, there has been minimal turnover in the workforce, and the firm has lost only a handful of employees, mostly for health reasons.

The company CEO considers this continuity of the workforce a healthy sign, but the human resources director is less sanguine. She feels that the workplace culture is becoming inbred, with locations focused on maintaining job security rather than looking for ways to be truly engaged in the company’s goals.

Which of the following, if true, most supports the CEO’s position that the firm is basically healthy?

Sales have declined proportionally less than those of Crescendo’s competitors.
Which quotation represents the organizational identity of a company?
“I know what the company wants to do.”
Which of the following is NOT true of line manager positions?
They are indicated on an organization chart by dashed, usually horizontal, lines.
Cathi Prokofit is a candidate for a position at Domino Grace, a financial services firm. She knows that corporate culture can have a large impact on employees, and so she is trying to learn as much as she can about the culture at Domino Grace. During one of her interviews, a Domino Grace human resources representative describes the culture as very team-oriented, people-oriented, and hard-working.

Which of the following best explains why Cathi should be skeptical about the description of the corporate culture at Domino Grace?

Human resources representatives have an incentive to describe the company in a positive light.
Wilson Communication Devices manufactures walkie-talkies for use in a business environment, primarily in the industrial manufacturing industry. The walkie-talkies are small and lightweight, and do not interfere with Wi-Fi or radio signals that the companies may use for other purposes. Wilson’s walkie-talkies typically are used for communication between workers in high noise environments, such as automobile manufacturing, welding shops, and construction sites. They can be used to talk or text, depending on the noise level, and also contain a feature that allows the worker to input information and store it for later use.

Since Wilson sells its walkie-talkies only to businesses, it needs to take into account factors that affect business buying centers, such as organizational influences and individual factors. Two salespeople for Wilson are arguing over which set of factors is more important to consider when making a sale. Bill argues that organizational influences such as company goals and operating environment are more important. Aubrey argues that individual factors of the buyer are more important. Which of the following statements, if true, supports Bill’s stand for organizational influences?

Company V has liquid assets and a firm financial standing even during the economic downturn. It determines it can afford to buy new equipment like Wilson walkie-talkies in order to upgrade its manufacturing process.
Ben: We need to select the team members for the Dragon Owls project. I have identified seven essential skills we need to make this project successful: leadership skills, creative skills, conceptual skills, collaborative skills, technical skills, interpersonal skills, and planning skills. Therefore, we should bring at least seven people on to the team.

Steve: Instead, we should identify all of the departments that have a stake in the success of the Dragon Owls project and ensure that a representative from each department is on the Dragon Owls team.

Curtis: I have a better idea. Since the Dragon Owls success is so important, it should contain the top performers in the entire organization.

Which of the following is assumed by Ben’s argument?

No potential member of the Dragon Owls team has both conceptual skills and interpersonal skills.
Roarke: To measure the effects of our educational programs designed to stop sexual harassment at our workplace, we recently conducted a survey asking employees about their attitudes and the behavior of the people around them. The survey, conducted after the programs, showed no improvement in either attitudes or behavior. Obviously, then, the survey was conducted improperly.

Which of the following is assumed by Roarke’s argument?

The educational programs had a significant effect on either attitudes or behavior, or both.
Which of the following is NOT a benefit of the internal recruiting process?
It produces fresh perspectives for the company.
Treadcorps, a regional automobile parts chain specializing in tires, has traditionally relied on employees with minimal educational skills who are mechanically familiar with cars. Most of the mechanics’ duties have had to do with physically servicing cars, finding necessary tires or parts in house, and, when necessary, phoning in special orders to a regional warehouse. A smaller staff of customer representatives handled auto owners in a reception room or over the phone.

Recently, however, the firm’s inventory has been digitized and a centralized store of parts generated. This has allowed the firm to open many more locations with little or no in-house inventory of parts. All employees now deal directly with customers, diagnose the problem, access an array of available stock online, and with a few clicks get the necessary parts underway to the location and schedule an appointment for installation.

As a result, the division between mechanics and customer service employees has collapsed. The old system of job titles, hiring requirements, and salary rates no longer makes sense. A job analysis is in order.

What should the job analyst begin by doing?

Learn as much about the workplace situation by talking with supervisors who are familiar with the normal operation of a typical Treadcorps location.
Kelly: The employees have been complaining that they are underpaid. I have to agree. The majority of them make less than $30,000 per year, which is less than the median wage in the areas near our offices.

Ron: You’ve got it wrong. Your concerns about fairness don’t apply in a small company like ours. With fewer than 100 employees, we need to cut costs in order to survive. Besides, the average salary of all the employees is over $50,000. What’s more, the number of departments with an average salary of over $40,000 is greater than the number of departments with an average salary under $40,000.

Which of the following, if true, most seriously weakens Ron’s argument?

The ten most highly compensated employees have an average salary of $250,000.
Which of the following is NOT considered part of the contingent workforce?
a telecommuting paralegal
Which of the following lists actions toward employees from least acute to most severe?
transfer > discipline > layoff > downsizing > firing
Which of the following is NOT considered part of compensation?
flextime
Employees in one division of Full Moon, a major dairy company specializing in artisan cheeses, prepare products for shipping to markets. The cheeses are processed by automated equipment, but employees at the end of the process package them by hand. This involves taking the finished cheeses off of a belt, cutting them into smaller pieces, wrapping them in plastic, and placing them into boxes. Some workers support the process by opening up and folding the boxes; others seal the outside of the boxes with a strip of adhesive tape. Finally, others carry stacks of boxes to a pallet, where they are taken to the shipping area by forklift.

During the holiday season, Full Moon always experiences a sharp increase in sales, and so more cheeses need to be processed than usual. In the past, the firm has added a number of contingent workers to handle the expected increase in preparation, but recently it has had difficulty in finding and retaining the usual number of part-timers. To cope, it has offered overtime to its full-time staff if they are willing to help prepare more cheeses than they usually handle so the company can satisfy its orders.

If an OSHA inspection occurred as the result of an injury in this division, which of the following would be most likely to make the agency critical of Full Moon’s safety practices?

Full Moon does not have a program that encourages supervisors or employees to report or discuss safety issues.
Jesse is director of the transportation department for a metropolitan area choked by commuter traffic. He is developing a policy that encourages companies to support alternate employee scheduling to decrease rush hour gridlock. Which strategy will be most effective in reducing traffic?
telecommuting
Greeley & Gatsby is a major financial firm that is experiencing some modest recovery after undergoing forced reorganization in the face of near-bankruptcy. As part of its retrenchment, the firm was forced to let go much of its staff of financial advisors, who had previously worked in several hundred small outlets nationwide. It retained much of its experienced upper management, along with 46 of its largest and most profitable offices in major metropolitan areas. Now, however, with signs of the economy expanding and investments showing a better return, the firm would like to reopen additional branches in suburbs and medium-sized cities.

Traditionally, this has been done by hiring full-time employees and promoting an experienced financial advisor from an existing branch to be the new division’s line manager. However, Horace Gatsby, the firm’s CEO, thinks that the expansion could be handled by hiring contingent workers, who would solicit new investment clients. As the new customers’ portfolios were transferred to the firm, they would be assigned to full-time advisors centrally. Once the goals for increasing the firm’s investments were met, the contingent workers could then be laid off, with the option of offering the workers with the strongest records full-time positions at one of the central locations.

Amanda Greeley, the executive vice president in charge of personnel, is not sold on the idea, feeling that the extensive use of contingent workers might lead to poor decision making on the advisor/client level and ultimately expose the firm to another economic crisis. She prefers a smaller expansion using only new full-time hires who would feel responsible for the long-term consequences of their actions.

Which of the following factors, if true, argues most strongly against Greeley & Gatsby’s plan of expanding with the use of contingent workers?

When the firm closed many of its local branches, many of its investors chose to move their accounts to other firms’ local branches.
Lanen Corporation is a major imaging solutions provider. The company has three main divisions: one that manufactures digital cameras, another that provides industrial color management systems, and one that manufactures traditional photographic products such as optical cameras and films. The digital side of the business has been growing at a healthy pace in recent years. The company is in the process of developing an ultra-slim digital camera, code-named Snip, which can provide outputs that mirror high-resolution print quality, but this requires additional investments. Lanen’s management team thinks that traditional photographic products are in the decline stage of the product life cycle. Some managers believe that the company should exit this line of business.

Which of the following, if true, strengthens the argument for keeping the traditional product line?

The demand for such products has not changed much over the past year, and most competitors have exited this business.
Jamal was having problems getting his taxes done. At what stage is Jamal in the consumer buying process?
I realize I have a problem to resolve.
Ask the true believers, and they’ll tell you simply that Apple’s products work better and do more or that they’re simpler to use. Apple buyer behavior, though, has much deeper roots. Apple puts top priority on understanding its customers. It knows that, to Apple buyers, a Mac computer or an iPhone is much more than just a piece of electronics equipment. It’s a part of buyers’ own self-expression and lifestyle-a part of what they are. When you own a Mac, you are anything but mainstream. You’re an independent thinker, an innovator, out ahead of the crowd.

The statements above most strongly support which of the following conclusions?

Some customers define themselves in part by the brands they choose.
In the definition of value, what is the most important word to note?
perception
Snazzy Sodas is known for a variety of all-natural sodas as well as its efforts toward social responsibility. The company has decided to produce a new line of energy drinks, and while it does not have the resources to promote its product widely, it can make a sizeable impact with a carefully chosen market segment. The CEO favors marketing the product primarily to young males, but the VP of operations recommends targeting female professionals.

Which of the following, if true, supports the CEO’s position?

Young males, as a group, consume more energy drinks than any other market segment.
Fizz Corporation develops and markets soft drinks and related products in the United States. Its product line consists of three beverage brands: Fizz Soda, a carbonated drink; Health Aqua, an enhanced water beverage; and Mango and Orange Fizz, two fruit-based drinks. The company’s CEO firmly believes that there is huge potential in the multi-billion dollar energy drink market.

Which of the following, if true, most strengthens the argument for Fizz to introduce an energy drink?

Studies indicate that consumers largely associate the company’s products with a healthy lifestyle.
Which of the following is NOT one of the four steps in marketing research?
obtain feedback
Jenna has designed a new line of shampoos and conditioners. She is currently looking into the pros and cons of selling the products at grocery stores and drugstores versus selling at hair salons. Jenna is at what point in the marketing process?
place strategy
Nike started with innovative running shoes for serious runners. Large companies, however, eventually seek full market coverage. Nike now makes and sells a broad range of sports products for just about anyone and everyone, with the goal of “helping athletes at every level of ability reach their potential.” Nike has different products designed to meet the special needs of each segment it serves.

Which of the following is most strongly supported by the statements above?

Nike’s goals have changed since the company began operations.
Which of the following is an example of a source of secondary data?
academic journals
Which of the following is an example of convenience goods and services?
newspapers
Patrick has a small retail store. Which item would Patrick definitely NOT sell in such a store?
food preservatives
Stardust ‘n’ Clay is a manufacturer and mass marketer of personal care products and nutritional supplements. The company plans to launch a line of organic beauty products that are made entirely from mineral pigments and organic plant extracts. These products, though expensive to process, offer much higher margins than the company’s current lines of beauty products. The market for organic beauty products is relatively untapped, with just a handful of players.

A Stardust ‘n’ Clay product line manager is critical of the organic product line proposal, arguing that sales of these products will come at the expense of sales of Stardust’s other beauty products. Her belief is that the new line will pull current customers to a new product rather than bring in new customers for the company. Which of the following, if true, is the most effective response to this critic?

The profit margin on organic beauty products is much higher than the profit margin on nonorganic beauty products.
Suppose that Red Bull wants to conduct research on how consumers would react to a proposed new vitamin-enhanced water drink in several flavors sold under the Red Bull name. Red Bull currently dominates the worldwide energy drink market. A new line of enhanced waters-akin to Glacéau’s successful VitaminWater brand-might help Red Bull to leverage its strong brand position even further.

Which of the following, if true, most strongly suggests that an enhanced-water product would NOT increase overall profits for Red Bull?

The customers who would purchase Red Bull enhanced water would be likely to reduce their purchases of energy drinks.
At Zappos, the Web retailer that began with selling shoes and now has expanded its selections to include clothing and accessories, the customer is at the center of everything. Employees are trained to “deliver WOW through service.” The company has dedicated itself to delighting its customers and keeping them coming back for more. These delighted customers also spread plenty of positive buzz about the company to their friends, who often become Zappos customers themselves. Zappos has relied almost exclusively on repeat customers and word of mouth instead of paid advertising. As the company grows, however, management is considering investing a larger share of its resources in a mass marketing campaign in magazines and newspapers.

All of the following questions are relevant to Zappos’ decision to move toward a mass marketing campaign EXCEPT which one?

Would Zappos become more profitable if it expanded its product offerings to include a broader range of fashion goods?
Which of the following is NOT one of the four stages of the product life cycle?
familiarization
What is price skimming?
This strategy is setting a high price to make a large profit; it can work when there is little competition.
Personal Devices Inc., based out of Portland, Oregon, is a manufacturer of premium cell phones. Most of the company’s handsets are equipped with high-end features such as large internal memory, sophisticated texting, camera and music functionalities, and data transfer capabilities. The company is planning to enter the Indian market. One of the senior managers argues that a stripped-down, low-priced model, without any extras, could be the starting point. The company can sell additional features added to the base model at higher price points.

Extensive analysis reveals that if Personal Devices offered Indian customers products at multiple price points, the company would initially earn more profits but would damage the brand in the long term. Which of the following, if true, weakens the argument that Personal Devices should offer products at multiple price points?

Niche companies that try to be everything to everyone usually lose their edge in their core business.
A number of high-end fashion designers have offered less expensive clothing lines sold exclusively through large discount retailers. For example, Vera Wang, known for her $10,000 wedding gowns found in boutiques and high-end retailers such as Bergdorf Goodman, offers a line called “Simply Vera-Vera Wang” at Kohl’s. In some cases, Kohl’s sells merchandise that is virtually identical to the more expensive version but costs one-tenth as much.

Which of the following, if true, suggests that the less expensive clothing lines would damage the sales of the designers’ high-end fashions?

Purchasers of high-end fashion believe that no worthwhile designer would attempt to sell to a wide audience.
Doors Inc. is a technology company that focuses on creating operating systems, which are the software packages that run everything on a computer. The company is releasing the newest version of its operating system and is deciding on the appropriate pricing strategy. The CEO favors an aggressive market penetration strategy in order to gain market share, even if it means pricing the operating system at a level at which the company would lose money on every sale.

Several senior managers are strongly in favor of a penetration pricing policy. Which of the following, if true, strengthens their argument?

There are significant economies of scale in production.
ValueNet Corporation sells electronic learning devices, consumer electronics products, and collectibles directly to American consumers using a team of telemarketers. Its aggressive cold calling tactics recently boomeranged when the company became the target of irritated consumers and consumer activist groups who flooded ValueNet’s phone system with return calls and messages. Management is planning to reduce the reliance on outbound calling and use other approaches like television infomercials.

A sales manager at the company comments, “The age of telemarketing is over.” Is the sales manager correct? Why or why not?

No, the focus of telemarketing has simply shifted.
West Coast Unlimited is a wholesaler who carries some 20,000 products. The company has close to 3,000 suppliers and sells its products mostly to business and institutional customers. The company markets its products by relying mainly on sales promotion and advertising. Faced with increasing costs, the company is looking at various ways to reduce expenses. West Coast Unlimited’s vice president feels that the company should shift one of its major distribution centers to a low-rent, low-tax area.

Which of the following, if true, weakens the vice president’s argument?

The low-rent, low-tax area is located farther from delivery sites.
Which of the following is the most likely example of a distribution channel with three intermediaries?
producer to agent/broker to wholesaler to retailer to consumer
Which of the following statements is TRUE?
A product with selective distribution has fewer distribution points than one that is intensively distributed but probably more than one that is exclusively distributed.
Phoenix Corporation is a manufacturer of leather goods. Its current product categories include belts, wallets, and bags. The company is now planning to extend its product category by producing a range of leather shoes for both men and women. Phoenix’s marketing managers are finalizing the best distribution strategy for this product category.

Which of the following, if true, strengthens the argument for exclusive distribution?

Currently, Phoenix’s other products are sold only through an established network of select stores.
Which of the following would be BEST transported by air?
medicines or emergency medical equipment
At Black & Decker marketing, implementation for the company’s products requires decisions and actions by thousands of people both inside and outside the organization. Marketing managers make decisions about target segments, branding, packaging, pricing, promoting, and distributing. They talk with engineering about product design and with manufacturing about production and inventory levels. They also connect with outside people, such as advertising agencies and the news media. The sales force urges retailers to advertise Black & Decker products, provide ample shelf space, and use company displays. Currently, Black & Decker sells a thermal leak detector that is designed to help reduce energy costs by identifying air leaks.

Which of the following, if true, suggests that there was a failure in planning in the marketing of the thermal leak detector?

Black & Decker overestimated the willingness of people to examine their homes in search of energy-saving opportunities.
If the Sandals ‘n’ Sunglasses company wants to stimulate an immediate purchase of its products by offering a one-day sale or other special promotion, which of the following types of advertising would it MOST likely want to use?
direct-action advertising
When so-called “missionary” salespeople call on existing customers and provide them with product samples and information, what does this fall under
sales support
Which of the following is NOT a question concerning physical distribution?
What is the best media to market these products?
What are liabilities?
amounts that are owed
At the end of the fiscal year for Santos Industrial Machinery, management raised concerns about the company’s financial performance. The company’s accountants have been asked to analyze the current financial state of the company by using ratio analysis.

Among the activity ratios the executives want to see calculated is the inventory turnover ratio. Which of the following questions does this ratio best help answer?

How quickly is Santos selling its products?
Streeter & Sons is a regional service company that has been in business for a few years but has not employed a managerial accountant or employed anyone else full time to keep track of its financial state. The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices in order to prevent a financial meltdown.

Which of the following, if true, strengthens the case that Streeter & Sons is profitable?

The company’s cost of goods sold is low relative to its sales revenue.
Kershner: Our income statement should be looking good this year. We’ve been doing excellent business this year, so we have a lot of gross sales. The company should be in good shape.

Michaels: It remains to be seen how our income statement will look overall. In spite of strong sales revenue, the overall income statement might not be as good as we might hope.

Which of the following does Michaels assume?

Other factors must be taken into account to arrive at an income statement.
Which of the following is NOT an example of a current liability?
bonds payable
Matheson Software has decided to look into its financial state and is hiring an outside accountant to do so. It is particularly interested in ratio analyses.

Which of the following, if true, strengthens the case that Matheson’s debt to owners’ equity ratio will be low?

Matheson’s owners’ equity is high.
Which of the following represents the accounting equation?
assets = liabilities + owners’ equity
At the end of the fiscal year for Santos Industrial Machinery, management raised concerns about the company’s financial performance. The company’s accountants have been asked to analyze the current financial state of the company by using ratio analysis.

Santos has a high level of current liabilities compared to its cash on hand. One company executive predicts that this means that Santos will not have a good acid-test ratio. Which of the following points out a flaw in his argument?

Marketable securities and receivables also need to be accounted for.
Which of the following would retained earnings NOT be used for?
to pay dividends
What is the name given to a record book or computer program containing the daily record of a firm’s transactions?
journal
Which type of budget ties together the other three types of budgets?
master budget
Domino Grace is a financial services company. It has started using scientific principles of management to analyze the compensation system for its financial advisors. Under the current system, revenue goals are based on the financial advisors’ performances in the previous year. Domino Grace management believes that the financial advisors could generate much more revenue if they were encouraged to offer derivatives, a complex but potentially profitable investment product.

Which of the following, if true, strengthens the argument of Domino Grace’s management?

Domino Grace financial advisors are well-trained in handling complicated investment options.
Ryerson: Money is hard to come by, so when one has money, one should make sure that, above all, one doesn’t lose it. One hears a lot of success stories about people making a lot of money by investing, but, of course, you don’t hear about the people who lost money investing. As risky as it is, based on so many unknown factors, investing your money really is like gambling. The only prudent plan is to keep money in a savings account where it can earn a predictable amount of interest. One can’t lose money that way, at least, so with money in a savings account, one can always count on it being there for future needs.

Groh: Investing is inherently risky, but the risk need not be insurmountable. It is true that the more potential there is for a higher return, the higher the chance is for more money to be lost. But there are more and less risky ways to invest, and even the less risky investments can give a significantly higher return than that from a simple savings account. When one diversifies one’s stock holdings, one increases the chances of getting a good return among one’s holdings and decreases the damage from a loss in value. Also, even if stocks lose value temporarily, the value of stocks overall has always gone up over long periods of time. So a savings account, while it may seem prudent and safe, is probably not the best way to ensure that money is being saved in the most optimal way possible.

Which of the following, if true, undermines Groh’s point about diversification?

When one stock value drops, others tend to also drop.
Which of the following is considered a tangible asset?
a plot of land
Munschausen is a German-based appliance company that is preparing to begin international operations by opening several production facilities and sales centers abroad. The company needs a substantial amount of capital to start its international operations and needs to decide whether to pursue debt financing by acquiring loans or whether it can get equity financing from investors.

Which of the following, if true, weakens the case for Munschausen’s seeking to acquire capital by equity financing?

Only the largest companies are listed on Germany’s public stock exchange.
Subprime loans have higher interest rates than conventional loans. Subprime loans are designed for borrowers with low credit scores who would not qualify for conventional loans. The borrower pays a higher rate to compensate the lender for the greater risk of a default. Subprime loans typically have adjustable rates, meaning that the interest rate can change over the life of the loan. Borrowers who take out adjustable subprime loans usually try to keep the rate as low as possible at the start of the loan, even when doing so would lead to higher payments over the entire life of the loan. After a large number of people defaulted on their subprime loans, research revealed that the majority of people who took out subprime loans could have qualified for conventional loans.

Suppose that a mortgage broker arranges for a subprime loan for a person who could have qualified for a conventional loan. The possibility of a conventional loan was never mentioned to the customer. Has the mortgage broker violated ethics guidelines?

Yes, because the mortgage broker violated the ethical value of openness by failing to mention clearly preferable alternatives
The Purple Vase Flower Store bought some shipping materials, received a bill from the supplier, and then paid the bill within 90 days. Which type of financing has Purple Vase utilized?
trade credit
Which of the following BEST defines solvency?
being able to pay debts when they become due
How is a revolving credit agreement different from a line of credit?
Only in a revolving credit agreement does the bank guarantee the loan and is the bank obligated to loan funds up to the credit limit.
Spartan Furniture wants to identify its sales and production goals and the costs required to meet those goals. Which type of budget does it need?
operating budget