MGMT 430 MIDTERM 1 EXAM
QUESTIONS WITH 100% CORRECT
ANSWERS LATEST VERSION 2025/2026.
Business - ANS Any organization that is engaged in making a product or providing a service
for a profit
Society - ANS Human beings and the social structures they collectively create
Interdependent - ANS Business and society are highly _________________
General Systems Theory (GST) - ANS Theory posits that organisms cannot be understood in
isolation, even though they have clear boundaries; they can only be understood in relationship
to their surroundings; introduced in the 1940s, biological
Management Theory - ANS Adapted to _____________ means that business firms are
embedded in a broader social environment with which they constantly interact
-Business and society together form an interactive social system
Ownership Theory of the Firm (Property/Finance Theory) - ANS -The firm is seen as the
property of its owners (shareholders)
-Argues the owners' interests are paramount and take precedence over the interests of others
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,-The purpose of the firm is to maximize its long-term market value, that is, to make the most
money it can for shareholders
Stakeholder Theory of the Firm - ANS -Argues the corporation serves a broader purpose, to
create value for society
-Must make profit for owners to survive, however, creates other kinds of value too
-Corporations have multiple obligations, all "stakeholder" groups must be taken into account
-Descriptive
-More realistic description of how companies really work
-Instrumental
-More effective corporate strategy
-Normative
-Stakeholder management is the right thing to do - ANS What are the core arguments for the
stakeholder theory of the firm?
The Stakeholder Concept - ANS -A stakeholder refers to persons or groups that affect, or are
affected by, an organization's decisions, policies, and operations
-A stake is an interest in-or claim on-a business enterprise
-Businesses are embedded in networks that involve many groups with such a stake
Stockholder(s) - ANS -Term stakeholder is NOT the same as _____________
Words sound similar BUT are not the same
-____________ are one of several kinds of stakeholders
-Market Stakeholders
-Nonmarket Stakeholders - ANS Stakeholder groups can be divided into two categories:
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Market Stakeholders - ANS those that engage in economic transactions with the company as
it carries out its primary purpose of providing society with goods and services
Nonmarket Stakeholders - ANS people or groups who—although they do not engage in direct
economic exchange with the firm—are affected by or can affect its actions
Internal Stakeholders - ANS ______________ are those, such as employees and managers,
who are employed by the firm
-They are "inside" the firm, in the sense that they contribute their effort and skill, usually at a
company worksite
External Stakeholders - ANS _______________ are those who—although they may have
important transactions with the firm—are not directly employed by it
-Employees
-Managers - ANS Examples of Market and Internal Stakeholders:
-Stockholders
-Customers
-Creditors
-Suppliers
-Wholesalers and Retailers - ANS Examples of Market and External Stakeholders:
-Governments
-Communities
-Nongovernmental Organizations
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, -Business Support Groups
-Media
-Competitors - ANS Examples of Nonmarket and External Stakeholders:
Stakeholder Analysis - ANS -It is part of every manager's job
-Process whereby identify relevant stakeholders and analyze their interest and power
-Asks 4 questions:
-Who are the relevant stakeholders?
-What are the interests of each stakeholder?
-What is the power of each stakeholder?
-How are coalitions likely to form?
-Answer this question by drawing market and nonmarket stakeholder maps
-Recognize that not all of groups are relevant to every situation
-Examples:
-Some businesses sell directly to the public and will not have retailers
-A certain stakeholder may not be relevant to a particular decision/action - ANS Who are the
relevant stakeholders?
-Analyzing stakeholder interests includes addressing:
-What are the groups' concerns?
-What does the group want/expect from their relationship with the firm?
-Examples:
-Stockholders have an ownership interest, they expect to receive dividends and capital
appreciation
-Customers are interested in gaining fair value and quality in goods and services they purchase
4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS WITH 100% CORRECT
ANSWERS LATEST VERSION 2025/2026.
Business - ANS Any organization that is engaged in making a product or providing a service
for a profit
Society - ANS Human beings and the social structures they collectively create
Interdependent - ANS Business and society are highly _________________
General Systems Theory (GST) - ANS Theory posits that organisms cannot be understood in
isolation, even though they have clear boundaries; they can only be understood in relationship
to their surroundings; introduced in the 1940s, biological
Management Theory - ANS Adapted to _____________ means that business firms are
embedded in a broader social environment with which they constantly interact
-Business and society together form an interactive social system
Ownership Theory of the Firm (Property/Finance Theory) - ANS -The firm is seen as the
property of its owners (shareholders)
-Argues the owners' interests are paramount and take precedence over the interests of others
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,-The purpose of the firm is to maximize its long-term market value, that is, to make the most
money it can for shareholders
Stakeholder Theory of the Firm - ANS -Argues the corporation serves a broader purpose, to
create value for society
-Must make profit for owners to survive, however, creates other kinds of value too
-Corporations have multiple obligations, all "stakeholder" groups must be taken into account
-Descriptive
-More realistic description of how companies really work
-Instrumental
-More effective corporate strategy
-Normative
-Stakeholder management is the right thing to do - ANS What are the core arguments for the
stakeholder theory of the firm?
The Stakeholder Concept - ANS -A stakeholder refers to persons or groups that affect, or are
affected by, an organization's decisions, policies, and operations
-A stake is an interest in-or claim on-a business enterprise
-Businesses are embedded in networks that involve many groups with such a stake
Stockholder(s) - ANS -Term stakeholder is NOT the same as _____________
Words sound similar BUT are not the same
-____________ are one of several kinds of stakeholders
-Market Stakeholders
-Nonmarket Stakeholders - ANS Stakeholder groups can be divided into two categories:
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Market Stakeholders - ANS those that engage in economic transactions with the company as
it carries out its primary purpose of providing society with goods and services
Nonmarket Stakeholders - ANS people or groups who—although they do not engage in direct
economic exchange with the firm—are affected by or can affect its actions
Internal Stakeholders - ANS ______________ are those, such as employees and managers,
who are employed by the firm
-They are "inside" the firm, in the sense that they contribute their effort and skill, usually at a
company worksite
External Stakeholders - ANS _______________ are those who—although they may have
important transactions with the firm—are not directly employed by it
-Employees
-Managers - ANS Examples of Market and Internal Stakeholders:
-Stockholders
-Customers
-Creditors
-Suppliers
-Wholesalers and Retailers - ANS Examples of Market and External Stakeholders:
-Governments
-Communities
-Nongovernmental Organizations
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, -Business Support Groups
-Media
-Competitors - ANS Examples of Nonmarket and External Stakeholders:
Stakeholder Analysis - ANS -It is part of every manager's job
-Process whereby identify relevant stakeholders and analyze their interest and power
-Asks 4 questions:
-Who are the relevant stakeholders?
-What are the interests of each stakeholder?
-What is the power of each stakeholder?
-How are coalitions likely to form?
-Answer this question by drawing market and nonmarket stakeholder maps
-Recognize that not all of groups are relevant to every situation
-Examples:
-Some businesses sell directly to the public and will not have retailers
-A certain stakeholder may not be relevant to a particular decision/action - ANS Who are the
relevant stakeholders?
-Analyzing stakeholder interests includes addressing:
-What are the groups' concerns?
-What does the group want/expect from their relationship with the firm?
-Examples:
-Stockholders have an ownership interest, they expect to receive dividends and capital
appreciation
-Customers are interested in gaining fair value and quality in goods and services they purchase
4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
