LHR 427 EXAM 1QUESTIONS & ANSWERS
demand - Answer -How many products are consumers willing to purchase at different
prices at a specific time?
supply - Answer -How many products are businesses willing to sell at different prices at
a specific time?
revenue - Answer -The total amount of money a business takes in during a given
period by selling goods and services.
profit - Answer -The amount of money a business earns above and beyond what it
spends for salaries and other expenses.
loss - Answer -When a business's expenses are more than its revenues.
for-profit organizations - Answer -¤Aim at maximization of profits for their shareholders
nonprofit organizations - Answer -¤Have a social mission
¤Do not aim at creating profit for their owners
¤Typically receive governmental funds, donations, and grants
social enterprises - Answer -¤Have a dual mission: social and commercial
¤Profits generated are used to support their social mission
¤E.g., TOMS shoes
How do we identify the equilibrium price and the equilibrium quantity? - Answer -The
price at which: number of products businesses are willing to supply = the number of
products consumers are willing to purchase at a specific time
What is required to make profit? - Answer -Adapting to Change
Acting Ethically
Abiding by the Law
Marketing Expertise
Management Skills
Financial Resources
Who is an entrepreneur? - Answer -Someone who assumes the risk of starting a
business
What is the risk associated with entrepreneurship? - Answer -The chance an
entrepreneur takes of losing time and money on a business that may not prove
profitable.
What are some advantages of being an entrepreneur? - Answer -¤Freedom to succeed
,¤Make your own decisions
¤Possible wealth
¤Sense of self-actualization
What are some disadvantages of being an entrepreneur? - Answer -¤Freedom to fail
¤No paid vacations
¤No health insurance
¤Responsible for others' welfare
¤Ego depletion
¤Personal sacrifices
standard of living - Answer -¤The amount of goods and services people can buy with
the money they have.
quality of life - Answer -¤The general well-being of a society in terms of its political
freedom, natural environment, education, health care, safety, amount of leisure, and
rewards that add to the satisfaction and joy that other goods and services provide.
stakeholders - Answer -¤All the people or, in general, entities who stand to gain or lose
by the policies and activities of a business and whose concerns the business needs to
address.
shareholders - Answer -¤All the people or, in general, entities who own a part pf a
publicly traded firm via a share or stock.
Who are some of the core stakeholders in a typical U.S. business? - Answer -
stockholders
customers
surrounding community
environmentalists
dealers
employees
government leaders
suppliers
media
bankers
What is outsourcing? - Answer -¤Contracting with other companies (often in other
countries) to do some of the functions of a firm, like production or accounting.
advantages of outsourcing - Answer -Access talent
Reduce operating costs
Focusing on core business/freeing up talent
disadvantages of outsourcing - Answer -Disadvantages
Reduced control over quality of work or even the working conditions
, Substandard work à more expensive to fix
Disconnect among employees/department
Lack of coherent culture
What are the five elements of the business environment? - Answer -economic and legal
technological
competitive
social
global
economic and legal - Answer -freedom of ownership, contract laws, elimination of
corruption, tradable currency, minimum taxes and regulation
technological - Answer -¨Information technology
¤Assists in decision making
¨Databases
¤Storing information
¤The issue of big data
¨Bar codes
¤Easier tracking of products and their information
¨Internet
¤Communication and collaboration
¤Virtual teams and telecommuting
¤E-commerce - buying and selling over the internet (B2B and B2C)
social - Answer -¨Diversity
¤Recruitment, selection, management, adjusting practices and policies
¨Demographic changes
¤E.g., aging population à Why is this important?
nAging workforce (different needs)
nConsumers
nPensions
¨Family structure changes
¤E.g., increase in the number of single-parent families and dual-earning families
competitive - Answer -¨Customer service
¨Stakeholder recognition
¤Ensuring that stakeholders are satisfied (at least to some extent)
¨Employee service
¤Empowering employees
¨Concern for the environment
global environment - Answer -¨Globalization
¨Wars and terrorism
¤Changing workforce
¤Allocation of taxes
demand - Answer -How many products are consumers willing to purchase at different
prices at a specific time?
supply - Answer -How many products are businesses willing to sell at different prices at
a specific time?
revenue - Answer -The total amount of money a business takes in during a given
period by selling goods and services.
profit - Answer -The amount of money a business earns above and beyond what it
spends for salaries and other expenses.
loss - Answer -When a business's expenses are more than its revenues.
for-profit organizations - Answer -¤Aim at maximization of profits for their shareholders
nonprofit organizations - Answer -¤Have a social mission
¤Do not aim at creating profit for their owners
¤Typically receive governmental funds, donations, and grants
social enterprises - Answer -¤Have a dual mission: social and commercial
¤Profits generated are used to support their social mission
¤E.g., TOMS shoes
How do we identify the equilibrium price and the equilibrium quantity? - Answer -The
price at which: number of products businesses are willing to supply = the number of
products consumers are willing to purchase at a specific time
What is required to make profit? - Answer -Adapting to Change
Acting Ethically
Abiding by the Law
Marketing Expertise
Management Skills
Financial Resources
Who is an entrepreneur? - Answer -Someone who assumes the risk of starting a
business
What is the risk associated with entrepreneurship? - Answer -The chance an
entrepreneur takes of losing time and money on a business that may not prove
profitable.
What are some advantages of being an entrepreneur? - Answer -¤Freedom to succeed
,¤Make your own decisions
¤Possible wealth
¤Sense of self-actualization
What are some disadvantages of being an entrepreneur? - Answer -¤Freedom to fail
¤No paid vacations
¤No health insurance
¤Responsible for others' welfare
¤Ego depletion
¤Personal sacrifices
standard of living - Answer -¤The amount of goods and services people can buy with
the money they have.
quality of life - Answer -¤The general well-being of a society in terms of its political
freedom, natural environment, education, health care, safety, amount of leisure, and
rewards that add to the satisfaction and joy that other goods and services provide.
stakeholders - Answer -¤All the people or, in general, entities who stand to gain or lose
by the policies and activities of a business and whose concerns the business needs to
address.
shareholders - Answer -¤All the people or, in general, entities who own a part pf a
publicly traded firm via a share or stock.
Who are some of the core stakeholders in a typical U.S. business? - Answer -
stockholders
customers
surrounding community
environmentalists
dealers
employees
government leaders
suppliers
media
bankers
What is outsourcing? - Answer -¤Contracting with other companies (often in other
countries) to do some of the functions of a firm, like production or accounting.
advantages of outsourcing - Answer -Access talent
Reduce operating costs
Focusing on core business/freeing up talent
disadvantages of outsourcing - Answer -Disadvantages
Reduced control over quality of work or even the working conditions
, Substandard work à more expensive to fix
Disconnect among employees/department
Lack of coherent culture
What are the five elements of the business environment? - Answer -economic and legal
technological
competitive
social
global
economic and legal - Answer -freedom of ownership, contract laws, elimination of
corruption, tradable currency, minimum taxes and regulation
technological - Answer -¨Information technology
¤Assists in decision making
¨Databases
¤Storing information
¤The issue of big data
¨Bar codes
¤Easier tracking of products and their information
¨Internet
¤Communication and collaboration
¤Virtual teams and telecommuting
¤E-commerce - buying and selling over the internet (B2B and B2C)
social - Answer -¨Diversity
¤Recruitment, selection, management, adjusting practices and policies
¨Demographic changes
¤E.g., aging population à Why is this important?
nAging workforce (different needs)
nConsumers
nPensions
¨Family structure changes
¤E.g., increase in the number of single-parent families and dual-earning families
competitive - Answer -¨Customer service
¨Stakeholder recognition
¤Ensuring that stakeholders are satisfied (at least to some extent)
¨Employee service
¤Empowering employees
¨Concern for the environment
global environment - Answer -¨Globalization
¨Wars and terrorism
¤Changing workforce
¤Allocation of taxes
