Deck 7: Understanding the Business

Question 1

In conducting a stakeholder analysis, what two dimensions should a company assess of each stakeholder?

A) potential to threaten the company and potential to cooperate
B) ability to invest and willingness to participate
C) potential for more investment and potential for raising objections
D) ability to bring in new investors and potential for disruption

Answer 1

A

Question 2

Companies measure their ability to encourage creativity and innovation by which of the following?

A) percentage of sales that came from new ideas
B) number of ideas that are patented
C) how many creative awards they win
D) how many of their ideas are copied by other companies

Answer 2

A

Question 3

What does the management of information provide to various levels of the organization?

A) access to instant information
B) executive dissemination
C) bottom-up flow of information
D) decision-making support

Answer 3

D

Question 4

According to the text, which of the following is one of the best ways to measure financial performance?

A) value of assets
B) return on capital
C) gross sales
D) net worth

Question 5

George has just graduated from college and has got his first full-time job. He needs a car to drive to his new job as it is not accessible by public transit. He still has student debt so he doesn't have a lot of money to spend, but wants something that is reliable. What is it that George is looking for in his purchase?

A) a deal
B) a bargain
C) value
D) quality

Question 6

Which of the following is important to measure, otherwise problems are not identified and aren't corrected until it is too late and the customer is lost?

A) satisfaction
B) customer service
C) defects
D) value

Question 7

What should a company do to build customer loyalty?

A) have a loyalty points program
B) offer discounts for regular customers
C) invite customers to special customer appreciation nights
D) reduce the effort a customer must go through to get a problem solved

Question 8

SWOT is the acronym for which of the following?

A) strengths, weaknesses, operations, and tactics
B) strengths, weaknesses, opportunities, and threats
C) strategies, work plans, operations, and tactics
D) strategies, weaknesses, outcomes, and trends

Question 9

What are the three most critical stakeholder groups of a corporation?

A) shareholders, employees, customers
B) customers, investors, employees
C) employees, politicians, customers
D) employees, customers, competitors

Question 10

Which of the following are affected by the decisions a business makes and therefore the business has a responsibility to consider them in those decisions?

A) stakeholders
B) politicians
C) competitors
D) stock brokers

Question 11

Which of the following is a critical success factor for any business?

A) being environmentally friendly
B) meeting and exceeding customer needs
C) low employee turnover
D) increase in stock price

Question 12

Which of the following is NOT one of the ways to measure financial performance?

A) profit
B) return on investment
C) market share
D) net worth

Question 13

Dave has a small clothing store. He wants to open a second store but needs investors to finance his expansion. Investors will look at which of the following primary financial performance measurements to evaluate the store's performance?

A) cash flow
B) return on assets
C) inventory turnover
D) net sales

Question 14

What is the ultimate indicator that a company has met and exceeded customer needs?

A) new customers
B) customer satisfaction rates
C) minimal loss of customers
D) customer loyalty

Question 15

A SWOT analysis is used to analyze which of the following about a company?

A) competitive position
B) internal controls
C) management structure
D) budgetary position

Question 16

Jennifer is starting college in September and she needs a computer. She doesn't have a lot of money, but needs something that she can do all her assignments on. She wants value, which can be best described as which of the following?

A) the lowest price
B) a quality product at a reasonable price
C) the highest quality product at the best price
D) the store that has the product she wants at the lowest price

Question 17

What are a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition?

A) superiority advantage
B) competitive advantage
C) strategic advantage
D) premium advantage

Question 18

In measuring, if a company has met customer needs through gap analysis, what is the first step?

A) determine the real gap that exists
B) measure the gap
C) determine the sources of the gap
D) take corrective action

Question 19

What is a discipline that involves the management of people, process, and technology around the care of information?

A) management of computer systems
B) management of information systems
C) management of information technology
D) management of systems technology

Question 20

Going above the heads of salespeople and customer service reps to complain is referred to as which of the following?

A) first-level communications
B) second-level communications
C) third-level communications
D) fourth-level communications

Question 21

For Google, what is organizing the world's information and making it universally accessible and useful?

A) tactical plan
B) strategic plan
C) direction
D) mission

Question 22

What is an overall explanation of why an organization exists and where it is trying to head?

A) tactical plan
B) prime directive
C) corporate charter
D) vision

Question 23

What is a vision for a company?

A) an explanation of why the company exists and where it wants to go
B) the same thing as an objective
C) a detailed plan that outlines the major organizational structure of the company
D) very relevant for the short term, but less useful for the long term

Question 24

Which of the following is NOT one of five stages of industry evolution?

A) introduction
B) decline
C) peak
D) maturity

Question 25

"To enrich the lives of everyone in WestJet's world by providing safe, friendly, affordable air travel" is best described as which of the following?

A) vision
B) goal
C) mission statement
D) objective

Question 26

"Make the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis." This statement by Yvon Chouinard, founder of Patagonia, can be best described as which of the following?

A) strategic plan
B) direction
C) mission statement
D) tactical plan

Question 27

When a company makes use of SWOT analysis, what is one of its objectives?

A) identify the best employees to fill each position within the organization
B) set specific short-term performance standards for each department
C) evaluate the desirability of issuing stocks or bonds in the current financial climate
D) identify the things it does well as an organization and the things it needs to improve

Question 28

Gina Raiter, the president and CEO of AutoMotion Auto Service Centres, has asked several managers and employees to help establish a statement to outline the fundamental purposes of their company. What will they create? 

A) payoff matrix
B) mission statement
C) tactical plan
D) organization chart

Question 29

Monica has just been hired by the Misty Mount Corporation to take over as the new chief executive officer. Her initial impression is that the company is in disarray, primarily because the employees do not have a sense of purpose or a common set of values. Monica's observations suggest that she needs to provide which of the following for Misty Mount?

A) vision
B) contingency plan
C) objective function
D) corporate logo

Question 30

What is Starbucks' sustainable competitive advantage?

A) great suppliers
B) the experience the company creates for its customers
C) great products
D) its employee training

Question 31

Which of the following defines the organization's purpose, values, and core goals, providing the framework for all other plans?

A) mission statement
B) position statement
C) strategic plan
D) tactical plan

Question 32

AlumiPlate's SWOT analysis revealed that potential competitors would find it difficult to begin operations in this specialized metal-coating industry. Using the terminology of SWOT, this is an example of which of the following?

A) strength
B) economy of scale
C) opportunity
D) threat

Question 33

Customers who visit any Good As New Appliance Repair Centre see a framed statement prominently displayed near the front door. The plaque describes the company's fundamental purposes. In part, it states that "All Good As New Centres operate under the belief that every customer deserves good quality parts, fast and dependable service, and a fair price." The words on this plaque probably reflect which of the following of Good As New?

A) strategic plan
B) mission statement
C) corporate agenda
D) corporate charter

Question 34

What is Starbucks' distinctive competence?

A) making great coffee into an experience
B) providing the best customer service
C) having the most diversified and international selection of coffees
D) having the best and most expensive coffee

Question 35

What is conducted to understand whether the entrepreneur's or CEO's vision is logical and feasible and whether the strategies used to pursue the vision will lead to success?

A) a competitive analysis
B) an industry analysis
C) an internal analysis
D) a SWOT analysis

Question 36

What is Starbucks' core competency?

A) premium products
B) unique product offerings
C) great customer service
D) making great coffee

Question 37

In a company in which an effective vision has been provided, which of the following is the most likely result?

A) There is no need for tactical planning.
B) The economic and competitive environments tend to be much more predictable.
C) Employees are likely to have a sense of purpose and a common set of values.
D) Goals and objectives are no longer needed.

Question 38

Employees often work with managers to develop which of the following that outlines the fundamental purposes of their organization?

A) organization chart
B) value statement
C) mission statement
D) PERT diagram

Question 39

Which topics about an organization should a meaningful mission statement address? 

A) form of ownership and methods of financing
B) self-concept and company philosophy
C) advertising strategy and distribution plan
D) tactical plans and contingency plans

Question 40

Which of the following is NOT one of Porter's five forces?

A) the risk of new entry by potential competitors
B) the bargaining power of buyers
C) the threat of substitute products
D) government changing laws or taxes

Question 41

Which of the following is NOT one of the key financial statements?

A) statement of cash flows
B) balance sheet
C) capital budget
D) income statement

Question 42

Which of the following shows the money flowing into and out of a company through its operating, investing, and financing activities?

A) retained earnings
B) statement of cash flows
C) income statement
D) operating budget

Question 43

Which of the following projects the types and amounts of assets a company will require to carry out its future plans and forecasts the amount of additional funds that will be needed to acquire those assets?

A) prototype operating budget
B) statement of net working capital
C) pro forma income sheet
D) pro forma balance sheet

Question 44

Which of the following is a mathematical tool financial managers use to assess the financial strengths and weaknesses of their company?

A) CAD/CAM
B) value stream mapping
C) capital budgeting
D) ratio analysis

Question 45

Which of the following indicates whether a company earned a profit or suffered a loss over the past accounting period?

A) balance sheet
B) income statement
C) statement of cash flows
D) cash budget

Question 46

As part of the financial planning process, planners create projected financial statements. What are those statements?

A) pro forma
B) per capita
C) empirical
D) prescriptive

Question 47

Which of the following is used to predict when a company will likely experience temporary shortages or surpluses of cash?

A) statement of projected revenue flows
B) balance sheet
C) statement of cash flows
D) pro forma balance sheet

Question 48

Which of the following measures the ability to pay debts as they come due?

A) liquidity ratio
B) asset management ratio
C) leverage ratio
D) profitability ratio

Question 49

Which item would be listed first on an income statement?

A) revenue
B) cost of goods sold
C) net operating income
D) retained earnings

Question 50

Which of these would provide stakeholders with information about how a company obtained and used cash in the most recent accounting period, as well as its cash balance at the end of the accounting period?

A) cash budget
B) income statement
C) shareholders' equity statement
D) statement of cash flows

Question 51

When financial managers are concerned about the ability to pay off debts that will come due in the next year, they are likely to focus on which of the following?

A) liquidity ratios
B) capital budgets
C) incremental analysis
D) leverage ratios

Question 52

The key numbers that financial managers use to calculate ratios usually come from which of the following financial statements of a company?

A) prospectus and operating budget
B) statement of cash flows
C) balance sheet and income statement
D) pro forma statements

Question 53

Which of the following summarizes a company's financial position at a specific point in time (e.g., a specific quarter or year)?

A) statement of cash flows
B) income statement
C) balance sheet
D) investment income statement

Question 54

What are two major projected financial statements developed during financial planning?

A) predicted statement of cash flows and predicted income statement
B) pro forma balance sheet and pro forma income statement
C) forecasted balance sheet and forecasted statement of cash flows
D) prototype retained earnings statement and prototype balance sheet

Question 55

What does the statement of cash flows show about a company?

A) money coming in and money going out
B) a schedule of payments for the debts that come due in the next year
C) a net profit or loss
D) the current assets and current liabilities that are likely to result in cash flows over the next accounting period

Question 56

Which of the following forecasts the sales, expenses, and net income for the company in some future time period?

A) inventory turnover ratio
B) net working capital
C) pro forma income statement
D) pro forma balance sheet

Question 57

Which of the following compare(s) select items in financial statements by computing percentages, rates, and proportions?

A) profitability quotients
B) ratio analysis
C) vertical analysis
D) pro rata analysis

Question 58

Which of the following are the four basic categories of financial ratios?

A) current, turnover, asset, and earnings ratios
B) liquidity, stability, ROI, and payback ratios
C) current, inventory, equity, and debt ratios
D) liquidity, leverage, ROI, and debt ratios

Question 59

Which of the following measures a company's ability to pay debts as they come due?

A) liquidity ratios
B) asset management ratios
C) leverage ratios
D) profitability ratios

Question 60

Which of the following is the income statement equation?

A) Owners' Equity - Assets = Liabilities
B) Net Income - Expenses = Revenue
C) Revenue - Expenses = Net Income
D) Assets = Liabilities + Owners' Equity

Question 61

Dayna is working for MNP Company. This is her first job out of college. She has been there for three years and despite doing outstanding work she has yet to get a promotion. There is a relatively new software company that is doing extremely well and is hiring. She has gathered information from databases and asked people in the industry about it. What should she specifically look at?

A) the profitability of the company for the last three years
B) their human resource policies
C) the potential for advancement
D) the benefit package

Question 62

Customer loyalty is the ultimate indicator that a company has met and exceeded customer needs.

Question 63

Companies have more goodwill with the overall general public when they are perceived to be which of the following?

A) philanthropic
B) progressive
C) prioritizing hiring women and minorities
D) politically active

Question 64

Lisa and Debbie are very serious shoppers but are also concerned about human rights issues. Every weekend they go to different malls around the city. They look for quality products at reasonable prices. But they also demand that the companies that they buy products from produce their products in which of the following ways?

A) in a safe, ethical manner
B) in an environmentally friendly manner
C) using only Canadian made components
D) following ISO 9000 and ISO 14000 rules

Question 65

ABC company has been very successful in Canada. However, there is not much more room for growth in Canada so the company must expand internationally. What is the expectation in Canada of how ABC operates internationally?

A) how everyone else operates in the country ABC is in
B) by the laws of the country ABC is in
C) in a manner consistent with the way ABC operates in Canada
D) according to international law

Question 66

Mark has just graduated from college. He is looking for a full-time job. He doesn't want to jump from company to company every few years; he wants to have a long career preferably at one company. What is one of the questions he needs to ask himself before accepting an offer of employment?

A) Is the company financially sound?
B) Has the company been around for a long time?
C) Does the company promote from within?
D) How is the company's stock trading?

Question 67

A discipline that involves the management of people, process, and technology around the care of information is referred to as computer science.

Question 68

Small business owner Barry Shain has always paid all of his current bills on time. However, this year he has more bills coming due than normal. Which type of ratio would help him evaluate whether he is likely to have enough cash to continue meeting his obligations over the next year?

A) liquidity ratio
B) managerial ratio
C) leverage ratio
D) profitability ratio

Question 69

In today's day and age, customers expect that companies not only provide value but demand that the companies be which of the following?

A) good overall corporate citizens
B) green companies
C) good to their employees
D) generous contributors to charity

Question 70

Companies are more likely to earn good publicity over the long run if they are which of the following?

A) good stewards of the environment
B) large donors to a charity
C) big sponsors of a community event
D) politically active

Question 71

Which sector of the Canadian economy has had a negative impact on the environment?

A) automobile industry
B) commodity industry
C) high tech industry
D) wine industry

Question 72

One of the critical success factors for any business is providing value.

Question 73

Companies today cannot just provide what the customer want as there are many companies that do that already but to be really successful they must satisfy customers beyond their expectations.

Question 74

A profitable company can still go bankrupt.

Question 75

A set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition is referred to as competitive advantage.

Question 76

Which of the following global business issues are most important to Canadian businesses?

A) fair trade
B) environment
C) global warming
D) workers' rights

Question 77

One critical success factor for any business is how environmentally friendly the company is.

Question 78

One way to measure if a business is meeting its customers' needs is through "third-level communications."

Question 79

XYZ company has just opened a factory in Bangladesh. Bangladesh has different laws than in Canada. The age that the law allows for young people to be employed full-time is much lower than in Canada. If XYZ hires employees who are younger than allowed by law in Canada but legal in Bangladesh what is the most likely outcome?

A) The company will save money but will have a negative reputation.
B) The company might have negative articles written about it in the newspaper.
C) The company will be charged under Canadian law.
D) The company will be charged under international law.

Question 80

Achieving financial performance is measured in a number of ways; the primary ones being profit, return on investment, cash flow, and net worth.