BusinessgingAction,g10eg(Bovee/Thill)gChapt
erg1 DevelopinggagBusinessgMindset
1) isgmoneygthatgangorganizationgbringsgingthroughgthegsalegofgitsggoodsgandgservices.
A) Competitivegadvantage
B) Revenue
C) Sales
D) Capitalginvestment
gAnswer:g B
Explanation:g Revenuegisgthegmoneygagcompanygbringsgingthroughgthegsalegofggoodsgandgservices.gD
ifficulty:g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
2) Whygisgtheglinkgbetweengriskgandgrewardgcriticalgforgagbusiness?
A) Itgisgagkeygaspectgofgsocialgresponsibility
B) Itgprovidesgopportunitiesgforgnot-for-profitgorganizationsgtogstaygingbusiness
C) Itgisgessentialgtogthegcounter-cyclicalgbusinessgmodel
D) Itgprovidesgincentivegtogtakegongthegris
kgAnswer:g D
Explanation:g Withoutgthegpromisegofgrewards,gbusinessesgwouldghavegnogincentivegtogtakegongth
egrisks.gAndgwithoutgentrepreneursgandgcompaniesgwillinggtogacceptgrisk,glittlegwouldggetgdoneging
thegeconomy.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgt
ogcategorizegbusinesses.
3) A(n)g isgagframeworkgofghowgagbusinessgintendsgtoggenerategrevenue.
A) businessgmodel
B) strategicgmanagementgtool
C) profitabilityganalysis
D) competitivegadvantage
gAnswer:g A
Explanation:g Agcompany'sgbusinessgmodelgisgagclear,gsimplegoutlinegofghowgthegbusinessgintend
sgtoggenerategrevenue.
Difficulty:g g 1:gEasy
AACSB:g g Analyticalgthinking
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
1
,4) isgthegtermgusedgtogdescribegthegdifferencegbetweengrevenuegandgexpenses.
A) Profit
B) Interest
C) Sales
D) Owner'sgequity
gAnswer:g A
Explanation:g g Profitgisgthegamountgofgmoneygleftgovergaftergallgthegcostsginvolvedgingdoinggbusines
s,ghavegbeengdeductedgfromgrevenue.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
5) refersgtogsomegaspectgofgagproductgorgcompanygthatgmakesgitgmoregappealinggtogtarg
etgcustomers.
A) Competitivegadvantage
B) Economiesgofgscale
C) Horizontalgintegration
D) Verticalgintegration
gAnswer:g A
Explanation:g Competitivegadvantagegrefersgtogsomegaspectgofgagproductgorgcompanygthatgmakesgitgm
oregappealinggtogtargetgcustomers.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
6) Whichgtypegofgorganizationgseeksgtogoperategefficientlygandgeffectivelygtogachievegitsggoal
sgwithoutgfocusinggongprofitgasgagmotive?
A) Businessgintermediary
B) Nonprofitgorganization
C) Servicegbusiness
D) Goods-
producinggbusinessgAnswer:
g B
Explanation:g Not-for-
profitgorganizationsg(alsogknowngasgnonprofitgorganizations)gsuchgasgmuseums,gmostguniversities
,gandgcharitiesgdognotghavegagprofitgmotive.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
2
,7) Ifgindividualsgandgcompaniesgbelievegtheygcangpursuegrewardsgwithoutgfacinggthegrisksgth
atgshouldgbegattachedgtogthosegpursuits,gtheygaregmoreglikelygtogengagegingirresponsiblegandg
evengunethicalgbehavior.gThisgsituationgisgknowngasga(n)g .
A) moralghazard
B) professionalgdilemma
C) barriergtogentry
D) competitivegadvantage
gAnswer:g A
Explanation:g Ifgindividualsgandgcompaniesgbelievegtheygcangpursuegrewardsgwithoutgfacinggtheg
risksgthatgshouldgbegattachedgtogthosegpursuits,gtheygaregmoreglikelygtogengagegingirresponsiblegan
dgevengunethicalgbehavior–agsituationgknowngasgmoralghazard.
Difficulty:g g 2:gModerate
AACSB:g g Ethicalgunderstandinggandgreasoning
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
8) Howgdogbusinessesggenerategrevenuegandgsatisfygthegneedsgofgthegcustomers?
A) Bygcontinuouslygaddinggvaluegduringgproductgcreation
B) Bygexpandingggeographicgreachgasgoftengasgpossible
C) Byglimitinggthegflowgofggoodsgingthegfree-marketgeconomy
D) Bygofferinggproductsgatgtheglowestgpricesgpossibl
egAnswer:g A
Explanation:g Aggoodgwaygtogunderstandgwhatganygbusinessgdoesgisgtogviewgitgasgagsystemgforgsa
tisfyinggcustomersgbygtransformingglower-valueginputsgintoghigher-
valuegoutputs.gAtgeverygstage,gagcompanygaddsgvaluegtogcreategthegproductgingagwaygthatgmakesgitga
ppealinggtogthegnextgcustomergingthegchain.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
9) Agbusinessgisganygprofit-
seekinggorganizationgthatgprovidesggoodsgandgservicesgdesignedgtogsatisfygcustomers'gneeds.
Answer:g g TRUE
Explanation:g Ingaggeneralgsense,gbusinessgcangbegdefinedgasganygprofit-
seekinggorganizationgthatgprovidesggoodsgandgservicesgdesignedgtogsatisfygcustomers'gneeds.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
3
, 10) Profitgrefersgtogthegmoneygthegcompanygbringsgingthroughgthegsalegofggoodsgandgservice
s.gAnswer:g FALSE
Explanation:g Profitgisgthegamountgofgmoneygleftgovergaftergexpenses–
allgthegcostsginvolvedgingdoinggbusiness–havegbeengdeductedgfromgrevenue.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
11) Businessesgaddgvaluegbygtransformingglower-
valueginputsg(likegpapergandgink)gintoghigher-valuegoutputsg(likegtextbooks).
Answer:g g TRUE
Explanation:g Businessesgaddgvaluegbygtransformingglower-valueginputsgtoghigher-
valuegoutputs.gIngothergwords,gtheygmakeggoodsgandgservicesgmoregattractivegfromgthegbuyer'sgpe
rspective.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
12) Ingagfree-
marketgeconomy,gcompaniesggenerallyghaveglimitedgautonomygingdecidinggwhichgcustomersgt
heygwantgtogfocusgongandghowgtheygwantgtogcompete.
Answer:g g FALSE
Explanation:g Ingagfree-
marketgeconomy,gcompaniesggenerallyghavegconsiderablegfreedomgingdecidinggwhichgcustomersg
theygwantgtogfocusgongandghowgtheygwantgtogcompete.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
13) Agcompanyghasgcompetitivegadvantagegwhengitsgproductsgaregmoregappealinggtogitsgchose
ngcustomers.
Answer:g g TRUE
Explanation:g Competitivegadvantagegmakesgagcompany'sgproductsgorgthegcompanygasgagwholeg
moregappealinggtogitsgchosengcustomers.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
4
erg1 DevelopinggagBusinessgMindset
1) isgmoneygthatgangorganizationgbringsgingthroughgthegsalegofgitsggoodsgandgservices.
A) Competitivegadvantage
B) Revenue
C) Sales
D) Capitalginvestment
gAnswer:g B
Explanation:g Revenuegisgthegmoneygagcompanygbringsgingthroughgthegsalegofggoodsgandgservices.gD
ifficulty:g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
2) Whygisgtheglinkgbetweengriskgandgrewardgcriticalgforgagbusiness?
A) Itgisgagkeygaspectgofgsocialgresponsibility
B) Itgprovidesgopportunitiesgforgnot-for-profitgorganizationsgtogstaygingbusiness
C) Itgisgessentialgtogthegcounter-cyclicalgbusinessgmodel
D) Itgprovidesgincentivegtogtakegongthegris
kgAnswer:g D
Explanation:g Withoutgthegpromisegofgrewards,gbusinessesgwouldghavegnogincentivegtogtakegongth
egrisks.gAndgwithoutgentrepreneursgandgcompaniesgwillinggtogacceptgrisk,glittlegwouldggetgdoneging
thegeconomy.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgt
ogcategorizegbusinesses.
3) A(n)g isgagframeworkgofghowgagbusinessgintendsgtoggenerategrevenue.
A) businessgmodel
B) strategicgmanagementgtool
C) profitabilityganalysis
D) competitivegadvantage
gAnswer:g A
Explanation:g Agcompany'sgbusinessgmodelgisgagclear,gsimplegoutlinegofghowgthegbusinessgintend
sgtoggenerategrevenue.
Difficulty:g g 1:gEasy
AACSB:g g Analyticalgthinking
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
1
,4) isgthegtermgusedgtogdescribegthegdifferencegbetweengrevenuegandgexpenses.
A) Profit
B) Interest
C) Sales
D) Owner'sgequity
gAnswer:g A
Explanation:g g Profitgisgthegamountgofgmoneygleftgovergaftergallgthegcostsginvolvedgingdoinggbusines
s,ghavegbeengdeductedgfromgrevenue.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
5) refersgtogsomegaspectgofgagproductgorgcompanygthatgmakesgitgmoregappealinggtogtarg
etgcustomers.
A) Competitivegadvantage
B) Economiesgofgscale
C) Horizontalgintegration
D) Verticalgintegration
gAnswer:g A
Explanation:g Competitivegadvantagegrefersgtogsomegaspectgofgagproductgorgcompanygthatgmakesgitgm
oregappealinggtogtargetgcustomers.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
6) Whichgtypegofgorganizationgseeksgtogoperategefficientlygandgeffectivelygtogachievegitsggoal
sgwithoutgfocusinggongprofitgasgagmotive?
A) Businessgintermediary
B) Nonprofitgorganization
C) Servicegbusiness
D) Goods-
producinggbusinessgAnswer:
g B
Explanation:g Not-for-
profitgorganizationsg(alsogknowngasgnonprofitgorganizations)gsuchgasgmuseums,gmostguniversities
,gandgcharitiesgdognotghavegagprofitgmotive.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
2
,7) Ifgindividualsgandgcompaniesgbelievegtheygcangpursuegrewardsgwithoutgfacinggthegrisksgth
atgshouldgbegattachedgtogthosegpursuits,gtheygaregmoreglikelygtogengagegingirresponsiblegandg
evengunethicalgbehavior.gThisgsituationgisgknowngasga(n)g .
A) moralghazard
B) professionalgdilemma
C) barriergtogentry
D) competitivegadvantage
gAnswer:g A
Explanation:g Ifgindividualsgandgcompaniesgbelievegtheygcangpursuegrewardsgwithoutgfacinggtheg
risksgthatgshouldgbegattachedgtogthosegpursuits,gtheygaregmoreglikelygtogengagegingirresponsiblegan
dgevengunethicalgbehavior–agsituationgknowngasgmoralghazard.
Difficulty:g g 2:gModerate
AACSB:g g Ethicalgunderstandinggandgreasoning
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
8) Howgdogbusinessesggenerategrevenuegandgsatisfygthegneedsgofgthegcustomers?
A) Bygcontinuouslygaddinggvaluegduringgproductgcreation
B) Bygexpandingggeographicgreachgasgoftengasgpossible
C) Byglimitinggthegflowgofggoodsgingthegfree-marketgeconomy
D) Bygofferinggproductsgatgtheglowestgpricesgpossibl
egAnswer:g A
Explanation:g Aggoodgwaygtogunderstandgwhatganygbusinessgdoesgisgtogviewgitgasgagsystemgforgsa
tisfyinggcustomersgbygtransformingglower-valueginputsgintoghigher-
valuegoutputs.gAtgeverygstage,gagcompanygaddsgvaluegtogcreategthegproductgingagwaygthatgmakesgitga
ppealinggtogthegnextgcustomergingthegchain.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
9) Agbusinessgisganygprofit-
seekinggorganizationgthatgprovidesggoodsgandgservicesgdesignedgtogsatisfygcustomers'gneeds.
Answer:g g TRUE
Explanation:g Ingaggeneralgsense,gbusinessgcangbegdefinedgasganygprofit-
seekinggorganizationgthatgprovidesggoodsgandgservicesgdesignedgtogsatisfygcustomers'gneeds.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
3
, 10) Profitgrefersgtogthegmoneygthegcompanygbringsgingthroughgthegsalegofggoodsgandgservice
s.gAnswer:g FALSE
Explanation:g Profitgisgthegamountgofgmoneygleftgovergaftergexpenses–
allgthegcostsginvolvedgingdoinggbusiness–havegbeengdeductedgfromgrevenue.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
11) Businessesgaddgvaluegbygtransformingglower-
valueginputsg(likegpapergandgink)gintoghigher-valuegoutputsg(likegtextbooks).
Answer:g g TRUE
Explanation:g Businessesgaddgvaluegbygtransformingglower-valueginputsgtoghigher-
valuegoutputs.gIngothergwords,gtheygmakeggoodsgandgservicesgmoregattractivegfromgthegbuyer'sgpe
rspective.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
12) Ingagfree-
marketgeconomy,gcompaniesggenerallyghaveglimitedgautonomygingdecidinggwhichgcustomersgt
heygwantgtogfocusgongandghowgtheygwantgtogcompete.
Answer:g g FALSE
Explanation:g Ingagfree-
marketgeconomy,gcompaniesggenerallyghavegconsiderablegfreedomgingdecidinggwhichgcustomersg
theygwantgtogfocusgongandghowgtheygwantgtogcompete.
Difficulty:g g 2:gModerate
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
13) Agcompanyghasgcompetitivegadvantagegwhengitsgproductsgaregmoregappealinggtogitsgchose
ngcustomers.
Answer:g g TRUE
Explanation:g Competitivegadvantagegmakesgagcompany'sgproductsgorgthegcompanygasgagwholeg
moregappealinggtogitsgchosengcustomers.
Difficulty:g g 1:gEasy
AACSB:g g Applicationgofgknowledge
LO:g 1.1:gExplaingthegconceptgofgaddinggvaluegingagbusiness,gandgidentifygfourgusefulgwaysgtogcateg
orizegbusinesses.
4
