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Homework answers / question archive / 1)When referring to risk, which of the following statements is reasonable?   Although risk means taking a chance at losing, your business is likely to always turn a profit

1)When referring to risk, which of the following statements is reasonable?   Although risk means taking a chance at losing, your business is likely to always turn a profit

Business

1)When referring to risk, which of the following statements is reasonable?

 

  • Although risk means taking a chance at losing, your business is likely to always turn a profit.
  • Good business strategy encourages less risk, because the least risky ventures usually make more profit.
  • Sizeable risks can lead to substantial profits, if the business takes calculated risks and captures good opportunities.
  • Although risk means taking a chance, a start-up will usually manage to get off the ground faster if the stakes are high.

Entrepreneurs and small business start-ups are advised to take calculated risk. Those that take the most risk may make the most profit.

2.

Profits equal _______.

  • the owner’s annual salary
  • the sales dollars that a business acquires, over time
  • revenues plus expenses, less taxes
  • the funds available for business growth, after expenses and salaries are paid

Profits are what the firm earns above and beyond what it pays out for expenses and salaries.

3.

Which of the following circumstances is most likely to reduce one’s standard of living?

  • An increase in the cost of some goods such as escalating gasoline prices
  • A decrease in the cost of some goods such as a decrease in housing prices
  • Stable prices and an increase in employee wages
  • Losing your job, but gaining a sizeable inheritance

By definition, the standard of living is the amount of goods and services that people buy, with the funds they have available. As such, if you increase the price of a good in high demand such as gasoline, the added expense will cut into the funds available to buy other things or the funds one can put in savings.

4.

When developing and maintaining good stakeholder relationships, companies find that _______.

  • it’s almost always best to continue to keep costs low, even if it means outsourcing most of the production
  • insourcing is always a good trade-off to outsourcing
  • most often, they must balance the needs of the stakeholders with the need to make profits
  • caring for the environment comes before caring for the well-being of employees

Stakeholders are people and organizations who stand to gain or lose by the actions of the business. Examples of stakeholders include customers, employees, government organizations, suppliers, and even community citizens. Firms must balance the need to make profits with the needs of stakeholders.

5.

Judy started a business called Music and Memories™. She recognized that music, socialization, and memory-challenging activities for senior citizens helped maintain their cognitive skills for longer periods of time. Though she strives for a financial gain, she uses the excess funds for enriching her programs instead of a personal profit. Her organization is classified as:

  • nonprofit
  • insourced
  • profit-seeking
  • outsourced

Nonprofit organizations strive for financial gains, like a for-profit business. However they repurpose the additional funds for increasing their social or educational goals.

6.

The number of businesses owned by immigrants, minority groups, and women has ________ in recent years.

  • declined
  • stabilized
  • grown
  • dramatically decreased

Millions are taking the entrepreneurial challenge. The number of minority-owned businesses in the U.S. has grown dramatically.

7.

Which of the following is (are) not considered a factor of production?

  • Knowledge
  • Land
  • Capital
  • Taxes

The five factors of production are (1) land, (2) labor, (3) capital, (4) entrepreneurship, and (5) knowledge

8.

Darnell lives in an area where labor is plentiful and locations for start-ups are relatively cheap. He is also confident that he can find start-up funds for a graphic arts business. As he evaluates the opportunity for his proposed venture, which two other factors of production does he need to succeed?

  • Capital and land
  • Labor and knowledge
  • Entrepreneurship and capital
  • Entrepreneurship and knowledge

The factors of production are capital, land, labor, entrepreneurship, and knowledge. In this situation, Darnell has learned that labor is available; start-up land is plentiful and economically feasible; and he is able to secure start-up capital. This leaves entrepreneurship (innovation/other intangible characteristics) and knowledge about his proposed craft that require focus.

9.

To encourage entrepreneurial growth, governments might _______.

  • pass laws that enable businesspeople to write contracts that are enforceable in court
  • establish a high tax rate to support loans for small businesses
  • take over ownership of small businesses when they are first getting started
  • reduce the value of their currency to encourage foreign investment

The government can lessen the risks of entrepreneurship by passing laws that enable businesspeople to write contracts that are enforceable in court. In countries that don’t yet have such laws, the risks of starting a business are that much greater.

10.

Juan has many business ideas that could satisfy the unfulfilled needs of people who live in his community. However, there are laws that govern the type of businesses that private citizens can own and business taxes are high because the government subsidizes many social programs in his nation. In this case, challenges in the _________________ environment increase the risk of Juan starting a business.

  • technological
  • competitive
  • economic and legal
  • social

The legal and economic environment can either increase the risk (too many laws may restrict trade; increasing taxes may act as a disincentive for starting a business), or decrease the risk (the ability to successfully find capital; laws that permit competition, and laws that keep taxes at a minimal level) of starting a business.

11.

When corruption is evident in governments:

  • the news media attempts to keep it quiet in order to minimize bad publicity.
  • it’s easier to open a store without a permit.
  • minimum wages are lower.
  • factories are more difficult to build without obtaining a permit through bribery of public officials.

When governments are corrupt, it?s difficult to build a factory or open a business without government permits. Often these permits are obtained via bribery.

12.

One of the most serious negative results of the increased use of databases by companies has been:

  • a decrease in the amount of “junk mail” received by consumers.
  • an increase in identity theft.
  • increased failure rates by e-companies.
  • changes in the organizational structures of companies leading to loss of jobs.

The legitimate collection of personal customer information opens the door to identity theft.

13.

At Backstreet Books, Inc., the department manager uses a hand-held scanner to determine the quantity of each best seller the bookstore has on its shelves, how many copies of each book was sold the past week and the past month, and exactly when the next shipment of these books is expected to arrive. Backstreet Books embraces the strategy of _______.

  • staying ahead of the competition by routinely secret shopping the competition’s shelves
  • using technology to stay responsive to customer needs
  • maintaining a low inventory turnover because it will keep costs down
  • changing demographics

Businesses must explore the technological environment that surrounds their respective industries. When scanning the technological environment, it is important to ask the following questions: Are there technologies the business could employ that would enhance the product or service offering? Are there technologies emerging that could threaten the demand for the products or services offered?

14.

Blake wanted to offer high-quality meals in his restaurant. His motto was “the best darn meat and potatoes for miles around.” The locals agreed that the food was good. They also agreed that if you decided to eat there, be prepared to wait. Food preparation and service were slow. Although Blake’s motto stated the business’s competitive advantage, your accurate advice to Blake would be _______.

  • the challenge now must be to tackle the social entrepreneurial aspect of running a business
  • service has become the number one consideration of customers; the restaurant must focus a little less on quality and a little more on service
  • the winning competitive advantage is one that addresses quality and service
  • the rule of thumb is to always stick to what you do best—if you’re good at it, your customers will respond with loyalty

In today’s competitive environment, customers are looking for a combination of good quality and good service.

 

 

 

 

15.

Lance and Laurie live on three acres of land in North Carolina, with two llamas, five goats, six chickens, and two dogs. The goats provide milk, cheese, yogurt and even fiber that is woven into yarn; the chickens provide free-range eggs; and the llamas serve as protection for the other animals. Although Lance and Laurie have other professional jobs, their home lifestyle represents _______.

  • a growing trend in the social environment to have more control of the food they eat and where it comes from
  • a need to challenge the competitive environments of big businesses that sell the same products
  • a desire to pay less sales tax on foods and other staple products at the larger stores
  • an aversion to technological advancement leading to a slower and less productive life

An important social trend that continues to grow in strength is a concern for what we eat and where it comes from. Business managers must continually scan the social environment for changes in attitudes, beliefs, and lifestyle trends.

16.

Among the changes resulting from increased global trade are:

  • less need for efficient distribution systems.
  • less global competition as companies set up manufacturing systems in foreign countries.
  • less need for employees to update skills as workers conform to U.S. standards.
  • improved living standards around the world.

Globalization has greatly improved living standards around the world.

17.

The impact of war and terrorism on U.S. business is that:

  • fewer jobs will be created in the United States.
  • companies have grown more slowly as money has been diverted to the war effort.
  • there is less global trade.
  • there are lower organizational costs for security personnel and equipment as firms are depending upon the government to provide those items.

Recent acts of war and terrorism have drawn billions from the U.S. economy. Some companies have benefited greatly, but others have lost workers or funds due to the war effort.

 

 

 

18.

The following chart describes opportunities and challenges in the external environments that surround businesses. Which of the following statements best characterize and fit in the empty cells?

 

Business Environment

Opportunity

Challenge

Economic & Legal

Freedom to choose and start your own business

High taxes

Technological

The Internet

 

Social

Wealthy senior citizens

Decrease in Social Security contributions

Global

 

War and Terrorism

  • Identity theft remains a technological environment challenge, while war and terrorism satisfy opportunities in the global environment due to the fact that they remain a small cost to society.
  • Databases present themselves as a challenge and threat in the technological environment; while globalization has provided for anincrease in the standard of living in the global environment.
  • E-commerce is a costly technological environment challenge, while the leisure time of seniors creates an opportunity in the global environment.
  • Identity theft is a challenge in the technological environment of businesses, while the desire for green living presents opportunities for new businesses in the global environment.

With more and more advances in using the Internet to gather information and enact business, there has been a significant increase in identity theft. Saving energy and producing products that cause less harm to the environment is a trend called greening.

19.

The new era of business will:

  • probably see a major decline in productivity.
  • be an information-based global revolution that will impact all sectors of the economy.
  • be dominated by an increase in the manufacturing sector as global markets grow.
  • see a rise in the agricultural sector.

We?re in the midst of an information-based global revolution that will alter all sectors of the economy: agricultural, industrial, and service.

20.

Today, high-paying service-sector jobs in the U.S. can be found in ___________________.

  • the automobile industry
  • accounting
  • farming
  • machine tools production

Today, high-paying jobs in the service sector include health care, accounting, entertainment and telecommunications. The service sector is also where most hiring is occurring. The service sector makes up over 70% of the value of the U.S. economy.

 

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