TEST BANK FOR BETTER BUSINESS 1ST CANADIAN EDITION BY SOLOMON Complete downloadable file at: b the company’s revenue is greater than its expenses Correct: A profit is earned when a company’s revenue (the total amount of money received for goods and services provided) is greater than its expenses (costs incurred while doing business) c the company successfully acquires a business loan Incorrect: A profit is earned when a company’s revenue (the total amount of money received for goods and services provided) is greater than its expenses (costs incurred while doing business) d the company is able to keep pace with technological processes Incorrect: A profit is earned when a company’s revenue (the total amount of money received for goods and services provided) is greater than its expenses (costs incurred while doing business) Answer: b Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 2) Which of the following will likely occur as a company generates more profit? a employees suffer Incorrect: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses b productivity increases Correct: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses c business closure Incorrect: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses d expenses are doubled Incorrect: Generating more profit allows a business to reward its employees and expand its operations, which can greatly increase productivity However, increases in productivity typically cut down on expenses, so it is unlikely that an increase in profit would lead to a doubling of expenses Answer: b Diff: Copyright © 2013 Pearson Canada Inc Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 3) Roland’s law firm has had a successful year and made a significant profit Which of the following actions could Roland take with his firm’s profit to increase productivity? a keep the profit for personal use Incorrect: Keeping profit for personal use and paying expenses not help the business grow and become more productive Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis b pay bills for utilities and office supplies Incorrect: Keeping profit for personal use and paying expenses not help the business grow and become more productive Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis c invest in a new computer system to digitize the firm’s paper records Correct: Keeping profit for personal use and paying expenses not help the business grow and become more productive Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis d pay income taxes Incorrect: Keeping profit for personal use and paying expenses not help the business grow and become more productive Investing in new technology to transfer the firm’s paper files into more user-friendly electronic files will free up time for Roland’s employees to get more work done on a daily basis Answer: c Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 4) The money a business earns is called _ a revenue Correct: Revenue is the total amount of money received for goods and services provided b capital Incorrect: Revenue is the total amount of money received for goods and services provided c expenses Incorrect: Revenue is the total amount of money received for goods and services provided d debt Incorrect: Revenue is the total amount of money received for goods and services provided Answer: a Diff: Type: MC Copyright © 2013 Pearson Canada Inc Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 5) Successful businesses benefit society by providing one of the following: a goods and services that people need and want Correct: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy b employment discrimnination for members of the community Incorrect: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy c ever-growing business debts and liabilities Incorrect: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy d lower standards of living for the entire society Incorrect: A successful business provides the goods and services people need and want, provides employment opportunities for members of the community, pays taxes, and generates income and spending in the economy Answer: a Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 6) Theresa is leasing a small shop at a mall near her home Her shop sells homemade perfumes In Taiwan, a firm that manufactures electric scooters is internationally recognized for some unique innovations in its products Although the two businesses vary considerably, they are similar because _ a both are seeking to make a profit Correct: Earning a profit drives both businesses to operate and grow When a business generates a profit, it is able to reward its employees, expand into new areas, and increase its productivity b both use their revenues to be socially responsible Incorrect: Earning a profit drives both businesses to operate and grow When a business generates a profit, it is able to reward its employees, expand into new areas, and increase its productivity c both are motivated by factors other than profit Incorrect: Earning a profit drives both businesses to operate and grow When a business generates a profit, it is able to reward its employees, expand into new areas, and increase its productivity d both seek to serve the community Copyright © 2013 Pearson Canada Inc Incorrect: Earning a profit drives both businesses to operate and grow When a business generates a profit, it is able to reward its employees, expand into new areas, and increase its productivity Answer: a Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 7) Non-profit organizations are similar to businesses because a they are created for profit used for company growth Incorrect: Though their motives are different, both businesses and non-profit organizations were created to serve a need in society Successful businesses benefit society by providing useful products, providing employment opportunities, and generating income and spending in the economy A non-profit organization is geared toward servicing the community through social and educational means b they are created to fulfill a need in their communities Correct: Though their motives are different, both businesses and non-profit organizations were created to serve a need in society Successful businesses benefit society by providing useful products, providing employment opportunities, and generating income and spending in the economy A non-profit organization is geared toward servicing the community through social and educational means c they are created to challenge competing organizations Incorrect: Though their motives are different, both businesses and non-profit organizations were created to serve a need in society Successful businesses benefit society by providing useful products, providing employment opportunities, and generating income and spending in the economy A non-profit organization is geared toward servicing the community through social and educational means d they are created to provide volunteer opportunities for people Incorrect: Though their motives are different, both businesses and non-profit organizations were created to serve a need in society Successful businesses benefit society by providing useful products, providing employment opportunities, and generating income and spending in the economy A non-profit organization is geared toward servicing the community through social and educational means Answer: b Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 8) The Canadian Cancer Society is an organization whose mission is the eradication of cancer and the enhancement of the quality of life of people living with cancer The Canadian Cancer Society is considered a non-profit organization because it a aims to generate revenue solely by focusing on cancer care services Copyright © 2013 Pearson Canada Inc Incorrect: Non-profit organizations not go into business to pursue profit They try to serve the community through social, educational, or political means The Canadian Cancer Society clearly serves the community b uses the money it earns only as a means to further help people living with cancer Correct: Non-profit organizations not go into business to pursue profit They try to serve the community through social, educational, or political means The Canadian Cancer Society clearly serves the community c focuses on Canadians who are too busy to live a better lifestyle Incorrect: Non-profit organizations not go into business to pursue profit They try to serve the community through social, educational, or political means The Canadian Cancer Society clearly serves the community d needs to employ thousands of workers to sustain its service Incorrect: Non-profit organizations not go into business to pursue profit They try to serve the community through social, educational, or political means The Canadian Cancer Society clearly serves the community Answer: b Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 9) The Canadian Diabetes Association is a non-profit organization It therefore performs one of the following: a pursuing profit Incorrect: A non-profit organization like the Canadian Diabetes Association seeks to conduct social and educational activities and serve the community by operating like a business Its owners keep only the revenues it needs to finance the organization’s growth and operations, and not seek to earn a profit b operating like a profit organization Incorrect: A non-profit organization like the Canadian Diabetes Association seeks to conduct social and educational activities and serve the community by operating like a business Its owners keep only the revenues it needs to finance the organization’s growth and operations, and not seek to earn a profit c serving the community Correct: A non-profit organization like the Canadian Diabetes Association seeks to conduct social and educational activities and serve the community by operating like a business Its owners keep only the revenues it needs to finance the organization’s growth and operations, and not seek to earn a profit d removing social and educational activities Incorrect: A non-profit organization like the Canadian Diabetes Association seeks to conduct social and educational activities and serve the community by operating like a business Its owners keep only the revenues it needs to finance the organization’s growth and operations, and not seek to earn a profit Answer: c Copyright © 2013 Pearson Canada Inc Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 10) _ are considered to be non-profit organizations a Private universities Incorrect: Hospitals are non-profit organizations; they not retain any profit from the services they provide Conversely, private universities, restaurants, and Greyhound seek to earn a profit b Hospitals Correct: Hospitals are non-profit organizations; they not retain any profit from the services they provide Conversely, private universities, restaurants, and Greyhound seek to earn a profit c Restaurants Incorrect: Hospitals are non-profit organizations; they not retain any profit from the services they provide Conversely, private universities, restaurants, and Greyhound seek to earn a profit d Greyhound Incorrect: Hospitals are non-profit organizations; they not retain any profit from the services they provide Conversely, private universities, restaurants, and Greyhound seek to earn a profit Answer: b Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 11) The Cambie Surgery Centre is a hospital based in Vancouver with private ownership that provides high-quality health care to the community A portion of the money the hospital brings in after expenses is paid out to the ownership of the hospital The Cambie Surgery Centre is a _ a charity Incorrect: Though there are many hospitals that are run as non-profit organizations, there are also private hospitals, such as the Cambie Surgery Centre, that operate with the goal of making a profit and are considered businesses b business Correct: Though there are many hospitals that are run as non-profit organizations, there are also private hospitals, such as the Cambie Surgery Centre, that operate with the goal of making a profit and are considered businesses c non-profit organization Incorrect: Though there are many hospitals that are run as non-profit organizations, there are also private hospitals, such as the Cambie Surgery Centre, that operate with the goal of making a profit and are considered businesses d government facility Copyright © 2013 Pearson Canada Inc Incorrect: Though there are many hospitals that are run as non-profit organizations, there are also private hospitals, such as the Cambie Surgery Centre, that operate with the goal of making a profit and are considered businesses Answer: b Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 12) benefit(s) from a business’s earned profit a Business owners Correct: A business’s earned profit benefits the owner, the employees in the form of increased salaries and benefits, and the community in the form of job opportunities and economic stimulus A company’s competitors are hurt by its profit, because the company can use the profit to become more efficient and offer more and better products b The international community Incorrect: A business’s earned profit benefits the owner, the employees in the form of increased salaries and benefits, and the community in the form of job opportunities and economic stimulus A company’s competitors are hurt by its profit, because the company can use the profit to become more efficient and offer more and better products c Business unions Incorrect: A business’s earned profit benefits the owner, the employees in the form of increased salaries and benefits, and the community in the form of job opportunities and economic stimulus A company’s competitors are hurt by its profit, because the company can use the profit to become more efficient and offer more and better products d A company’s competitors Incorrect: A business’s earned profit benefits the owner, the employees in the form of increased salaries and benefits, and the community in the form of job opportunities and economic stimulus A company’s competitors are hurt by its profit, because the company can use the profit to become more efficient and offer more and better products Answer: a Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 13) _ is geared toward generating a profit a A university Incorrect: Organizations such as universities, hospitals, environmental groups, and charities are non-profit organizations A shoe manufacturing firm seeks to generate a profit b A hospital Incorrect: Organizations such as universities, hospitals, environmental groups, and charities are non-profit organizations A shoe manufacturing firm seeks to generate a profit c A shoe manufacturing firm Copyright © 2013 Pearson Canada Inc Correct: Organizations such as universities, hospitals, environmental groups, and charities are non-profit organizations A shoe manufacturing firm seeks to generate a profit d An environmental group Incorrect: Organizations such as universities, hospitals, environmental groups, and charities are non-profit organizations A shoe manufacturing firm seeks to generate a profit Answer: c Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 14) A multibillion-dollar car manufacturing company and a small-town souvenir shop are alike in that they a both offer goods and services Correct: All businesses offer goods and/or services in order to earn a profit Both businesses may or may not aim to expand globally or educate the community b both operate as non-profit organizations Incorrect: All businesses offer goods and/or services in order to earn a profit Both businesses may or may not aim to expand globally or educate the community c both aim to expand globally Incorrect: All businesses offer goods and/or services in order to earn a profit Both businesses may or may not aim to expand globally or educate the community d both seek to educate the community Incorrect: All businesses offer goods and/or services in order to earn a profit Both businesses may or may not aim to expand globally or educate the community Answer: a Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 15) An organization that seeks to serve the community through social, educational, or political means is _ a a corporation Incorrect: They may operate like a business, but non-profit organizations not go into business to pursue a profit Instead, they seek to serve the community through social, educational, or political means b a non-profit organization Correct: They may operate like a business, but non-profit organizations not go into business to pursue a profit Instead, they seek to serve the community through social, educational, or political means c a multinational company Incorrect: They may operate like a business, but non-profit organizations not go into business to pursue a profit Copyright © 2013 Pearson Canada Inc Instead, they seek to serve the community through social, educational, or political means d a manufacturing firm Incorrect: They may operate like a business, but non-profit organizations not go into business to pursue a profit Instead, they seek to serve the community through social, educational, or political means Answer: b Diff: Type: MC Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 16) Leon recently opened a nursery that sells flowers, trees, and shrubs grown by local farmers Leon sells _ a goods Correct: The physical products that a business offers are called goods Flowers, trees, and shrubs are tangible items that Leon can physically give to his customers If Leon provided intangible products, such as educational training for gardeners, he would be providing a service b services Incorrect: The physical products that a business offers are called goods Flowers, trees, and shrubs are tangible items that Leon can physically give to his customers If Leon provided intangible products, such as educational training for gardeners, he would be providing a service c skills Incorrect: The physical products that a business offers are called goods Flowers, trees, and shrubs are tangible items that Leon can physically give to his customers If Leon provided intangible products, such as educational training for gardeners, he would be providing a service d income Incorrect: The physical products that a business offers are called goods Flowers, trees, and shrubs are tangible items that Leon can physically give to his customers If Leon provided intangible products, such as educational training for gardeners, he would be providing a service Answer: a Diff: Type: MC Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors 17) An intangible product that is bought or sold is called _ a a good Incorrect: Services refer to intangible products that are bought or sold b a service Correct: Services refer to intangible products that are bought or sold c income Copyright © 2013 Pearson Canada Inc Incorrect: Services refer to intangible products that are bought or sold d profit Incorrect: Services refer to intangible products that are bought or sold Answer: b Diff: Type: MC Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors 18) A golf shirt displayed in a sportswear shop is considered a good because _ a a golf shirt can be sold directly to a consumer Incorrect: A good is distinguished from a service by being physical or tangible The other choices are true of all products collectively, both goods and services b a golf shirt can be bought by anyone Incorrect: A good is distinguished from a service by being physical or tangible The other choices are true of all products collectively, both goods and services c a golf shirt is a product of a business or a company Incorrect: A good is distinguished from a service by being physical or tangible The other choices are true of all products collectively, both goods and services d a golf shirt is a physical or tangible product Correct: A good is distinguished from a service by being physical or tangible The other choices are true of all products collectively, both goods and services Answer: d Diff: Type: MC Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors 19) Brenda orders some fish at a seafood restaurant Which of the following is she going to pay for when the bill comes? a service Incorrect: When Brenda orders fish at the restaurant, she’s paying for the goods (fish), as well as the service of preparing, cooking, and serving the meal b goods Incorrect: When Brenda orders fish at the restaurant, she’s paying for the goods (fish), as well as the service of preparing, cooking, and serving the meal c both service and goods Correct: When Brenda orders fish at the restaurant, she’s paying for the goods (fish), as well as the service of preparing, cooking, and serving the meal d enjoyment Incorrect: When Brenda orders fish at the restaurant, she’s paying for the goods (fish), as well as the service of preparing, cooking, and serving the meal Answer: c Copyright © 2013 Pearson Canada Inc 10 Answer: a Diff: Type: TF Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors 107) A haircut is an example of a service a True Correct: Services refer to intangible products that are bought or sold Unlike a polo shirt on the rack at Old Navy, services cannot be physically handled Services include products such as haircuts, health care, car insurance, and theatrical productions b False Incorrect: Services refer to intangible products that are bought or sold Unlike a polo shirt on the rack at Old Navy, services cannot be physically handled Services include products such as haircuts, health care, car insurance, and theatrical productions Answer: a Diff: Type: TF Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors 108) When Ivan bought a sandwich at a restaurant, he only paid for the goods a True Incorrect: The price of the sandwich also includes the service of preparing and serving the food b False Correct: The price of the sandwich also includes the service of preparing and serving the food Answer: b Diff: Type: TF Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors 109) Unsuccessful organizations typically fail because they have not kept pace with the latest technology and techniques a True Correct: Successful companies are able to keep pace with technological progresses and harness new knowledge, information, and strategies Unsuccessful organizations typically fail because they have not kept pace with the latest technology and techniques b False Copyright © 2013 Pearson Canada Inc 53 Incorrect: Successful companies are able to keep pace with technological progresses and harness new knowledge, information, and strategies Unsuccessful organizations typically fail because they have not kept pace with the latest technology and techniques Answer: a Diff: Type: TF Page Reference: 11 Objective: 1.5 Describe the factors of production 110) Deciding how to allocate business resources is one of the tasks of an entrepreneur a True Correct: An entrepreneur assumes the risk of creating, organizing, and operating a business and directs all of a business’s resources b False Incorrect: An entrepreneur assumes the risk of creating, organizing, and operating a business and directs all of a business’s resources Answer: a Diff: Type: TF Page Reference: 10 Objective: 1.5 Describe the factors of production 111) Baby boomers, the generation born between 1943 and 1960, represent the majority of the aging population in Canada a True Correct: Baby boomers, the generation born between 1943 and 1960, represent the majority of the aging Canadian population b False Incorrect: Baby boomers, the generation born between 1943 and 1960, represent the majority of the aging Canadian population Answer: a Diff: Type: TF Page Reference: 18 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 112) Baby boomers not appeal to companies as a target market because they not have much spending power a True Incorrect: Opportunities exist for businesses to market to baby boomers as they age As boomers become empty-nesters, they will most likely move to smaller homes or condominiums closer to the cities, where they can be close to shopping, restaurants, and entertainment Copyright © 2013 Pearson Canada Inc 54 b False Correct: Opportunities exist for businesses to market to baby boomers as they age As boomers become empty-nesters, they will most likely move to smaller homes or condominiums closer to the cities, where they can be close to shopping, restaurants, and entertainment Answer: b Diff: Type: TF Page Reference: 18 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 113) According to Statistics Canada, by 2026—when most baby boomers will have retired— the median age of Canadians will rise to 43.3 years and the share of seniors will be 21.2 percent By 2051, these figures are estimated to rise to 46.8 years and 26.4 percent, respectively a True Correct: According to Statistics Canada, by 2026—when most baby boomers will have retired —the median age of Canadians will rise to 43.3 years and the share of seniors will be 21.2 percent b False Incorrect: According to Statistics Canada, by 2026—when most baby boomers will have retired—the median age of Canadians will rise to 43.3 years and the share of seniors will be 21.2 percent Answer: a Diff: Type: TF Page Reference: 18 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 114) Michael decided that it might be profitable to start a business that catered to the needs of baby boomers He believed this would be a good business move because, as the boomer generation aged, its needs would change An older population offers business opportunities in terms of health care, pharmaceuticals, and travel industries a True Correct: Many businesses will try to cater to the needs of the aging baby boomer generation because an aging population presents many new business opportunities b False Incorrect: Many businesses will try to cater to the needs of the aging baby boomer generation because an aging population presents many new business opportunities Answer: a Diff: Type: TF Page Reference: 18 Copyright © 2013 Pearson Canada Inc 55 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 115) A green economy is one that factors ecological concerns into its business decisions a True Correct: A green economy factors ecological concerns into its business decisions b False Incorrect: A green economy factors ecological concerns into its business decisions Answer: a Diff: Type: TF Page Reference: 19 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 116) Globalization reduces competition for Canadian-based businesses and workers a True Incorrect: Globalization increases competition by driving down prices for both products and labour b False Correct: Globalization increases competition by driving down prices for both products and labour Answer: b Diff: Type: TF Page Reference: 16 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 117) Keeping up with the pace of technology is an expensive operation for many businesses a True Correct: Computers become outdated after three years and obsolete after five, so they must be upgraded frequently The cost of software, training, and technology infrastructure further adds to the expense b False Incorrect: Computers become outdated after three years and obsolete after five, so they must be upgraded frequently The cost of software, training, and technology infrastructure further adds to the expense Answer: a Diff: Type: TF Page Reference: 20 Copyright © 2013 Pearson Canada Inc 56 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 118) Telecommuting is a manifestation of the “virtual global workforce.” a True Correct: Technology like the Internet that enables workers to work anywhere regardless of their location has vastly expanded the pool of labour that companies can draw on to build their workforce b False Incorrect: Technology like the Internet that enables workers to work anywhere regardless of their location has vastly expanded the pool of labour that companies can draw on to build their workforce Answer: a Diff: Type: TF Page Reference: 20 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 119) The PEST model is used to measure changes in the internal business environment that might affect the company’s ability to prosper a True Incorrect: The PEST model (in any of its various forms) is used to measure changes in the external business environment that might affect the company’s ability to prosper b False Correct: The PEST model (in any of its various forms) is used to measure changes in the external business environment that might affect the company’s ability to prosper Answer: b Diff: Type: TF Page Reference: 15 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 120) Porter’s Five Forces model is used to analyze the micro-environment for a strategic business unit a True Correct: Porter’s Five Forces analysis model is used to analyze the micro-environment for a strategic business unit b False Incorrect: Porter’s Five Forces analysis model is used to analyze the micro-environment for a strategic business unit Answer: a Copyright © 2013 Pearson Canada Inc 57 Diff: Type: TF Page Reference: 15 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 121) The PEST model refers to Political-legal, Economic, Socio-cultural, and Technological factors a True Correct: The PEST model (Political-legal, Economic, Socio-cultural, and Technological) is used to measure changes in the external business environment that might affect the company’s ability to prosper b False Incorrect: The PEST model (Political-legal, Economic, Socio-cultural, and Technological) is used to measure changes in the external business environment that might affect the company’s ability to prosper Answer: a Diff: Type: TF Page Reference: 14 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 122) A socio-cultural environment is an interconnected system of different demographic factors a True Correct: A socio-cultural environment is an interconnected system of different demographic factors such as race, ethnicity, gender, age, income distribution, sexual orientation, and other characteristics b False Incorrect: A socio-cultural environment is an interconnected system of different demographic factors such as race, ethnicity, gender, age, income distribution, sexual orientation, and other characteristics Answer: a Diff: Type: TF Page Reference: 16 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 123) Companies must develop a diversity initiative to outline their goals and objectives for managing, retaining, and promoting a diverse workforce a True Correct: A diversity initiative outlines a company’s goals and objectives for managing, retaining, and promoting a diverse workforce It might include a non-discrimination Copyright © 2013 Pearson Canada Inc 58 policy, minority network, or diversity education b False Incorrect: A diversity initiative outlines a company’s goals and objectives for managing, retaining, and promoting a diverse workforce It might include a non-discrimination policy, minority network, or diversity education Answer: a Diff: Type: TF Page Reference: 19 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 124) Product and service technologies are used for creating products and services for customers a True Correct: Product and service technologies are used for creating products and services for customers Organizations must constantly be watching for technological breakthroughs that might make their products or services better than those of their competitors b False Incorrect: Product and service technologies are used for creating products and services for customers Organizations must constantly be watching for technological breakthroughs that might make their products or services better than those of their competitors Answer: a Diff: Type: TF Page Reference: 20 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 125) The Internet had become viable before the advent of the World Wide Web a True Incorrect: In 1995, the Internet was just starting to proliferate Even though it had been commercially available for years at that point, the Internet had only recently become viable after the advent of the World Wide Web a few years before b False Correct: In 1995, the Internet was just starting to proliferate Even though it had been commercially available for years at that point, the Internet had only recently become viable after the advent of the World Wide Web a few years before Answer: b Diff: Type: TF Page Reference: 21 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats Copyright © 2013 Pearson Canada Inc 59 126) Grace loves working with children and plans to start a school for children with disabilities She intends to reinvest any profit she makes back into the school rather than use the profit to enrich herself What type of business is Grace trying to establish? Answer: Grace’s school is a non-profit organization, where any excess profit that she earns will be reinvested in the school Feedback: Non-profit organizations are those that are run like a business, but are not motivated by profit Excess revenue is spent on fulfilling the organization’s mission Diff: Type: ES Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 127) Identify what profit is generally used for Answer: Profit generated by a company can be used to reward employees, increase productivity, or expand a business Profit drives the growth of a business Feedback: Profit is earned when a company’s expenses are less than its earnings Generating profit is usually the main goal of businesses, as this help companies to increase productivity and expand their business Diff: Type: ES Page Reference: Objective: 1.3 Explain the difference between for-profit and non-profit organizational goals 128) Ron is planning to open his own café He intends to sell a variety of coffees and sandwiches He also hires employees who will prepare the food and serve the customers Describe what kind of product Ron’s customers are paying for Answer: Ron is offering both a good and service, because customers are paying for the coffee, its preparation, and the service they receive Feedback: Businesses create products, which are either a good or a service Goods are tangible objects sold to customers, while services are intangible products such as a haircut or massage Some businesses, like Ron’s business, offer both a good and service Diff: Type: ES Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors Copyright © 2013 Pearson Canada Inc 60 129) Enumerate the five factors of production Answer: Labour (physical or intellectual work done by people), Natural resources (raw materials), Capital (physical facilities and money), Entrepreneurs (people who assume the risk of starting a business), and Technology (services that make businesses more efficient and productive.) Feedback: The factors of production are the resources used to produce goods and services Diff: Type: ES Page Reference: 10 Objective: 1.5 Describe the factors of production 130) Explain how the social environment can affect businesses Answer: Social, economic, or political factors can change the social environment in a country When a demographic changes, for example, an influx of immigrants increasing racial diversity within the population, businesses must adjust accordingly to retain their share of the market Feedback: Businesses must consider demographic factors such as population because this affects the way people live and spend their money To thrive, businesses must adjust according to demographic changes in society Diff: Type: ES Page Reference: 18 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 131) What are the advantages and disadvantages of globalization for the Canadian economy? Answer: Globalization reduces production costs, which in turn reduces prices for the consumer However, increased competition from overseas firms can cause job losses for Canadian workers Feedback: Globalization is a movement toward a more interconnected world Technological advances mean that companies of any size can compete globally This presents both advantages and risks for the Canadian economy Diff: Type: ES Page Reference: 16 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats Copyright © 2013 Pearson Canada Inc 61 132) Explain the risks of e-commerce Answer: Buying products online requires storing personal information such as name, address, and credit card details This places consumers at risk of identity theft Feedback: As e-commerce gains in popularity, more businesses are using the Internet to reach customers However, once personal information is stored online, hackers are able to use this information to steal customers’ identities Businesses must take measures to secure the private information of their customers and prevent identity theft Diff: Type: ES Page Reference: 21 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 133) Explain the concept of a business Answer: A business is any activity that provides goods or services in exchange for other goods and services or money, based on their perceived worth Feedback: Every business needs a sufficient number of customers to whom its output can consistently be sold at a profit Diff: Type: ES Page Reference: Objective: 1.2 Define business and discuss the role of business in the economy 134) Describe a country’s standard of living Answer: A country’s standard of living is the level of wealth, comfort, material goods, and necessities available to its people Feedback: It is the ease by which people living in a time or place are able to satisfy their needs and wants It is generally measured by standards such as income per person and poverty rate Diff: Type: ES Page Reference: Objective: 1.2 Define business and discuss the role of business in the economy 135) What is quality of life? Answer: Copyright © 2013 Pearson Canada Inc 62 Quality of life is subjective and intangible It takes into account not only the material standard of living, but also more intangible aspects that make up human life Feedback: Such intangible aspects might include freedom from slavery, torture, and discrimination; the right to rest and leisure, education, safety, choice of employment, and equal treatment; and freedom of religion and of thought Diff: Type: ES Page Reference: Objective: 1.2 Define business and discuss the role of business in the economy 136) Describe what a public business sector is Answer: The public business sector includes goods and services produced, delivered, and allocated by the government and public sector organizations Feedback: The government sector includes all federal, provincial, municipal, and territorial government ministries and departments It also includes public school boards, public universities and colleges, and public health and social service institutions Diff: Type: ES Page Reference: Objective: 1.4 Explain the difference between private and public business sectors 137) Explain what a private business sector is Answer: The private business sector includes goods and services produced and delivered by private individuals or groups as a means of enterprise for profit Feedback: The sector is not controlled by government These businesses can be small firms owned by just one person, or large multinational businesses that operate globally Diff: Type: ES Page Reference: Objective: 1.4 Explain the difference between private and public business sectors 138) Explain whether all businesses create a product Answer: Whether a business is for-profit or non-profit, one of its goals is to provide some sort of product to its customer base Feedback: A product can be either a good or a service Diff: Copyright © 2013 Pearson Canada Inc 63 Type: ES Page Reference: 10 Objective: 1.4 Explain the difference between private and public business sectors 139) Describe an entrepreneur Answer: An entrepreneur is someone who assumes the risk of creating, organizing, and operating a business and who directs all the business resources Feedback: Entrepreneurs are a human resource, just like labour, but what sets entrepreneurs apart from labour is their willingness to bear risks and their ability to manage an enterprise effectively Diff: Type: ES Page Reference: 10 Objective: 1.5 Describe the factors of production 140) Why are entrepreneurs so important? Answer: Entrepreneurs are the innovators who create business ideas and start businesses from those ideas Feedback: Entrepreneurs attempt to make a profit by combining the factors of production (inputs) to create goods and services (outputs) Diff: Type: ES Page Reference: 11 Objective: 1.5 Describe the factors of production 141) What are the main functional areas in businesses? Answer: The main functional areas in businesses are sales and marketing; customer service; information technology and communications; accounting and finance; research and development; manufacturing, production, and distribution; human resources; and administration Feedback: Functional areas in businesses are often separate departments where business activities are grouped by similar tasks or skills Diff: Type: ES Page Reference: 12 Objective: 1.6 Identify the functional areas of most businesses 142) Distinguish between the internal and external environment of businesses Copyright © 2013 Pearson Canada Inc 64 Answer: The internal environment refers to what occurs within the organization while the external environment refers to what occurs outside the organization Feedback: Organizations operate within several business environments that affect their potential for success Diff: Type: ES Page Reference: 13 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 143) Define the term internal environment Answer: The internal environment is the term used to refer to what occurs within the organization It includes the five Ms: Management, Materials, Machinery (equipment), Money (wages, finance), and eMployees (internal customers) Feedback: Companies have control over this environment and make changes to it according to strategic goals and conditions that occur outside the company Diff: Type: ES Page Reference: 13 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 144) Compare micro-environment and macro-environment Answer: The micro-environment may be defined as including groups and organizations that have a direct relationship with the business and have a direct interest in the activities of the company because they are clearly affected by its actions The macro-environment is the external environment over which the organization can exert little influence Feedback: Both micro-environment and macro-environment are part of the external environment Diff: Type: ES Page Reference: 13 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 145) Describe the PEST model Copyright © 2013 Pearson Canada Inc 65 Answer: The PEST model (Political-legal, Economic, Socio-cultural, and Technological) is used to measure changes in the external business environment that might affect the company’s ability to prosper Feedback: There are several variations of the PEST model Other forms you may encounter include SLEPT analysis (Social, Legal, Economic, Political, and Technological) or STEEPLE analysis (Social/demographic, Technological, Economic, Environmental [nature], Political, Legal, and Ethical), and sometimes PESTLE or PESTEL and PESTLIED (where the I represents International) Diff: Type: ES Page Reference: 14 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 146) Explain how politics affects an organization Answer: The political-legal environment reflects the government’s relationship with business It is often a direct consequence of the political parties in power, which represent the popular opinion of the citizens of the region Feedback: Organizations hire lobbyists to influence legislation and run advocacy ads that state their point of view on public issues Diff: Type: ES Page Reference: 15 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 147) Explain how the law affects an organization Answer: Laws pertaining to taxes, competition, consumers, products, and the environment (land, air, and water) are some of the laws about which organizations need to be aware Feedback: Laws and regulations tell organizations what they can and cannot do, and companies that not abide might be fined, have their managers imprisoned, or have their businesses closed for noncompliance with the law Diff: Type: ES Page Reference: 16 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats Copyright © 2013 Pearson Canada Inc 66 148) What is globalization? Answer: Globalization is the movement toward a more interconnected and interdependent world economy Feedback: This means that economies around the world are merging as technology, goods and services, labour, and capital move back and forth across international borders Diff: Type: ES Page Reference: 16 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 149) Describe how the socio-cultural environment affects an organization Answer: A socio-cultural environment is an interconnected system of different demographic factors such as race, ethnicity, gender, age, income distribution, sexual orientation, and other characteristics Feedback: Social, economic, and political movements and trends cause the social environment to change constantly; an influx of immigrants can change racial demographics, or an economic slump can change income distribution demographic Diff: Type: ES Page Reference: 18 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats 150) Define the term diversity initiative Answer: A diversity initiative outlines a company’s goals and objectives for managing, retaining, and promoting a diverse workforce Feedback: A diversity initiative might include a non-discrimination policy, minority network, or diversity education Diff: Type: ES Page Reference: 19 Objective: 1.7 Describe the macro business environment and how managers use the PEST model to analyze external business opportunities and threats Copyright © 2013 Pearson Canada Inc 67 ... public business sectors 75) What are goods? a any physical products offered by a business Correct: Goods are any physical products offered by a business A roast beef sandwich at Arby’s, a forty-two-inch... items b any intelligent products offered by a business Incorrect: Goods are any physical products offered by a business A roast beef sandwich at Arby’s, a forty-two-inch LCD television at Best Buy,... items c any intangible products offered by a business Incorrect: Goods are any physical products offered by a business A roast beef sandwich at Arby’s, a forty-two-inch LCD television at Best Buy,