Deck 1: Taking Risks and Making Profits Within the Dynamic Business Environment

Question 1

The amount of profit or loss earned by a business can be found by subtracting the firm's expenses from its revenues.
Profit is the difference between a firm's revenue and its expenses.

Answer 1

True

Question 2

Revenue is the amount a business earns above and beyond what it spends for expenses and costs.

Answer 2

False

Question 3

Stakeholders are all the people who stand to gain or lose by the policies and activities of a business.

Answer 3

True

Question 4

A Canadian company is said to be outsourcing when it sources part of the purchased inputs from outside of Canada.
This is the definition for offshoring.

Question 5

Services are tangible products such as clothing and food.
Services are intangible products

Question 6

Profits of a business include the salaries paid to the owners and employees of that business.

Question 7

The knowledge and skills learned in business courses are seldom relevant to students who work for nonprofit organizations or volunteer groups.

Question 8

Non-profit organizations often do strive for financial gains.

Question 9

An entrepreneur is an individual who assumes the risk of starting a business.

Question 10

Maintaining a high quality of life requires the combined efforts of businesses,nonprofit organizations and volunteer groups.

Question 11

Businesses seek to earn a profit by providing goods and services to others.

Question 12

The quality of life refers to the general well-being of a society.

Question 13

The only way a firm can increase its profits is to increase its sales revenue.
The companies that take the most risk stand to make the most profit.

Question 14

If a business' costs and expenses are greater than its revenue,it will suffer a loss.

Question 15

Any activity that produces a good or service to others while operating at a profit can be classified as a business.

Question 16

The chance an entrepreneur takes of losing time and money on a business venture that is not profitable is known as the opportunity cost of the business.

Question 17

Stakeholders include customers,employees,stockholders,suppliers,dealers,bankers,government officials and environmentalists.

Question 18

By balancing the demands of customers and stockholders,businesses have actually satisfied the demands of all stakeholders.
Figure 1.1 shows typical stakeholders.

Question 19

The Buckmaker Corporation generated total revenues of $30 million dollars while incurring expenses of $17 million.Therefore,during the year Buckmaker Corporation earned a profit of $13 million.
The profit a firm earns is found by subtracting total costs from total revenue.

Question 20

Health care availability,a clean environment,and good schools all contribute to a high quality of life.

Question 21

In Canada,most of the offshoring that occurs is with China.
Most offshoring is with the United States.

Question 22

Recent studies have shown that the major advantage rich nations have over poor nations is an abundance of land and labour.

Question 23

A charitable organization,whose goals do not include making a personal profit for its owners or organizers,such as the Red Cross or the Salvation Army,is best classified as a small business.
A charitable organization is not classified as a business since it does not seek a profit.Charities are classified as nonprofit organizations.

Question 24

If they wish to create more wealth,poor nations should focus on policies that increase entrepreneurship and the effective use of knowledge.
Poor nations often have plenty of labour and land,as well as access to capital.However,the absence of entrepreneurship and knowledgeable workers seems to be the reason that most poor countries remain poor.

Question 25

According to management expert Peter Drucker,the most important factor of production in our economy is knowledge.

Question 26

Companies have gone from outsourcing production jobs to offshoring research and development.

Question 27

Starting a business is a riskier path toward business success than working your way up the ranks of a large business.

Question 28

Money is one of the five factors of production that contribute to the creation of wealth.
see Figure 1.2.

Question 29

Mandeep Robin has started her own Internet consulting firm.While she recognizes the risks involved in operating a business,she is still willing to invest her time,effort,and money in hopes of earning a profit.Mandeep Robin is an example of an entrepreneur.
An entrepreneur is someone who risks time and money to start and manage a company.

Question 30

The two factors of production that are the most important for creating wealth are entrepreneurship and the effective use of knowledge.

Question 31

Unlike businesses,employees of nonprofit organizations are not required to learn the business skills of accounting,marketing,or financial management.
In order to achieve their goals,nonprofit organizations need people with many of the same skills required by businesses.For example,even though nonprofit organizations do not seek a profit,they still may deal with large sums of money and must keep financial records.Nonprofit organizations also need people with leadership,marketing,and information management skills.

Question 32

An effort to please one group of stakeholders eventually pleases all stakeholders.
Balancing the demands of all stakeholders is a tremendous challenge for organizations.Tradeoffs are common.Actions benefiting one group may have a negative impact on another group of stakeholders.

Question 33

Tools,machinery,and buildings are all types of capital resources.

Question 34

Business decisions should consider the interests of customers,employees,suppliers,government officials,and stockholders.
All of the groups mentioned stand to gain or lose by the policies and activities of a business.They are referred to as stakeholders.A major challenge of businesses is to improve profits while trying to maintain a balance between the interests of all stakeholders.See Figure 1.1

Question 35

Political and religious freedom,quality education,access to health care,and a clean environment are all factors that contribute to an improved quality of life.
The quality of life focuses on the general well-being of a society,and includes factors such as freedom,security,leisure time,and other factors that go beyond the goods and services people can buy with their incomes.

Question 36

A lesson to learn from the story of Ron Joyce,who became a franchisee in the first Tim Hortons,is that to be a successful entrepreneur you need to find something that you love to do.

Question 37

Countries with an inadequately trained work force and few entrepreneurs often achieve the highest levels of income by relying on a large number of workers.
Poor countries often have plenty of labor and access to adequate capital.However,the two factors of production that are most critical in generating national wealth are entrepreneurship and knowledge.A country found lacking in these will experience relatively low levels of income.

Question 38

Nonprofit organizations are similar to businesses in that they often provide goods and services that satisfy the needs of society.
Businesses are not the only organizations that produce goods and services.Government agencies,public schools,and charities such as the Salvation Army provide goods or services,but are classified as nonprofit organizations since there is no profit motive.

Question 39

Entrepreneurship is one of the five factors of production that contribute to the creation of wealth.

Question 40

Paid vacations and a generous pension are among the benefits provided by the government to entrepreneurs.

Question 41

High taxes and government restrictions help to encourage entrepreneurs by providing greater incentives for people to work hard and create profit.

Question 42

Technology allows firms to be more responsive to their customers' wants and needs.

Question 43

E-commerce is the buying and selling of products and services by businesses and consumers over the Internet.

Question 44

One of the five factors of production is Capital,which includes machines,tools,buildings,money,or whatever else is used in the production of goods.

Question 45

Laws that allow businesses to write enforceable contracts decrease the risk of doing business.

Question 46

Governments can increase the risk of entrepreneurship by passing laws that enable business people to write contracts that are enforceable in court.

Question 47

E-business is mostly done with Web technologies.

Question 48

Productivity is the amount of output that is generated given the amount of input.

Question 49

E-commerce only covers one aspect of e-business.

Question 50

One way for governments to promote entrepreneurship is to allow private ownership of businesses.

Question 51

Technology refers to everything that makes business operations more efficient and productive.

Question 52

The business environment refers to the surrounding factors that either help or hinder the development of businesses.

Question 53

Corruption and illegal activities are expected in a capitalist system and can be beneficial.

Question 54

Countries that keep taxes and regulations to a minimum provide the best environment for competitive businesses.

Question 55

Technology can help businesses become more efficient and productive.

Question 56

Taxes and government regulations are part of the legal environment in which businesses operate.

Question 57

Because capital - machinery and tools - are now becoming available in world markets,it is the critical element for wealth creation.

Question 58

Well-managed businesses will grow and prosper regardless of the business environment in which they operate.

Question 59

Technology refers to innovations from applied science or engineering research.

Question 60

Technology affects people in all industries.

Question 61

Business owners are often reluctant to enter the e-commerce market because of the sizeable investment required in land,fixtures,and buildings.

Question 62

One way an organization can restructure to better meet the needs of customers is to train front-line people to make decisions within certain limits.

Question 63

The B2C market consists of selling goods and services from one business to another.

Question 64

An electronic file where information is stored is called a CPU.

Question 65

The goal of empowerment in the work environment is to give management more control over the actions of lower-level workers.

Question 66

Producing a high quality product will ensure success in the competitive environment.

Question 67

Industry Canada sets out the ground rules for how private sector organizations may collect,use,or disclose personal information in the course of commercial activities.
The Federal privacy law is PIPEDA.

Question 68

The competitive environment now empowers managers to make decisions quickly for their front line employees.

Question 69

Information in a database allows firms to carry less inventory and therefore reduce their costs.

Question 70

To remain competitive in today's market,firms must produce a quality product and offer outstanding service and products at a reasonable price.

Question 71

The Internet is more important to business-to-business segment of e-commerce than to the business-to-consumer segment of e-commerce.

Question 72

Identity theft occurs when a robber personally knows their victim.
Identity theft is the obtaining of personal information about a person,and using that information for illegal purposes.

Question 73

Successful firms follow a customer-driven strategy,as opposed to the management-driven strategy used in the past.

Question 74

Traditional businesses have been learning how to deal with competition from B2B firms.

Question 75

To be implemented successfully,empowerment requires that employees are better trained.

Question 76

Bar codes allow retailers to scan information about products consumers buy,directly into a database.

Question 77

There are no federal privacy laws.E-commerce has existed since the first computers were invented.

Question 78

The databases of a business can include a great deal of information about the firm's customers.

Question 79

The Internet has increased and improved a business's responsiveness to their customers.

Question 80

Empowerment consists of employees from different departments within an organization formed to improve employee effectiveness.