Exam 2: The Environment of Business

A negative balance of trade results when a country imports more than it exports.

What is an organizational boundary?

Which of the following is correct with regard to the business cycle? Due to better government management of the economic environment, the business cycle has become less volatile in recent decades A depression occurs when the trough of the business cycle extends five or more years There are no recognizable short-term phases in the business cycle; rather, the cycle can only be recognized as a long-term phenomenon A recession is usually defined as two consecutive quarters when the economy shrinks All of these are correct

Which of the factors in Porter's five forces model is generally most important? Threat of potential entrants Rivalry among existing competitors Threat of substitutes Suppliers None of these

What is a poison pill?

Which of the following best describes nominal GDP? Total quantity of goods and services produced by an economic system Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system Total value of all goods and services produced within a given period by a national economy, through domestic factors of production measured in current dollars, with all components valued at current prices Total value of all goods and services produced within a given period by a national economy through domestic and international factors of production Total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located

How does a poison pill work?

Which of the following is the best definition of vertical merger? A strategy in which one of the companies in the merger is a supplier or customer of the other An approach by which firms move away from department-oriented organization and toward process-oriented team structures that cut across old departmental boundaries The strategy of using the internet and word-of-mouth marketing to spread product information Any activity that adds value to some input by transforming it into an output for an internal or external customer The strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials and resources

Inflation is relevant only for specific industries.

If you were the Minister of Finance taking care of fiscal policy, which one of the following could you implement? A tax increase A cut in social security programs An increase in federal transfer payments An increase in spending to military bases All of these ideas could be implemented

Deflation is generally a positive thing for consumers because consumers' dollars go further.

A key goal of an economic system is stability. What is meant by stability in an economic system?

Inflation increases the purchasing power of your money.

The socio-cultural environment describes the relationship between government and unions. the relationship between business and government. the relationship between international and domestic corporations. the customs, values, attitudes, and demographic characteristics of the society in which an organization functions. the intensity of the competition in an industry.

________ policy involves the collection and spending of government revenues, while __________ policy focuses on controlling the size of the nation's money supply. Productivity; inflation Taxation; monetary Monetary; fiscal Fiscal; monetary National debt; annual deficit

Which of the following best defines the term business cycle? The conditions of the economic system in which an organization operates The pattern of short-term ups and downs in an economy The total quantity of goods and services produced by an economic system during a given period The measure of economic growth that compares how much a system produces with the resources needed to produce it The total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system

List and briefly describe each of the organizational environments that affect businesses.

Marquand says: Information technology has had its biggest impact on business in communication and access to data. With the networking and streamlined communication modalities now available to businesses, businesses can collaborate with each other as well as within a business at different locations with the greatest of ease. Businesses also have access to a greater range of information and at a greater speed than ever before. And with this information being constantly updated, businesses now have the ability to plan in response to market conditions with much greater efficiency than before. Stevenson responds: Information is important, but what's most important is how that information is used. And there is no more direct way that information technology has helped businesses than the ability to sell directly. Selling online has opened up entirely new markets that allow businesses to make greater profits, with greater efficiency, than ever before. Many businesses, such as Amazon, have been able to use online selling exclusively to dramatic effect: without having to spend money on bricks-and-mortar storefronts, they can make billions in profits selling products at low prices. Which of the following is assumed by Marquand? All businesses now use information technology for communications and information. Relatively few businesses sell products online. Less information was available to businesses before the information technology revolution than there is now. Consumers preferentially choose to buy from businesses that use the latest information technology. Selling online is relatively unimportant to most businesses.

If a Danish company builds a production facility in Canada, will the value of the goods produced be included in Canada's GNP? Explain.

________ refers to the total quality and quantity of goods and services that a country's citizens can purchase with the currency used in their economic system. Aggregate output The national debt Standard of living The business cycle The consumer price index