1|P a g e
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19 Answers are at the end of Each chapter Chapter 1
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TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
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1) A business is any organization that is engaged in making a product or providing a service for a profit.
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⊚ trueag
⊚ false
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2) The term stakeholder refers exclusively to the founders of a business organization.
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⊚ trueag
⊚ false
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3) Businesses and society are independent of each other.
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⊚ trueag
⊚ false
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4) The stakeholder theory of the firm argues that a firm‘s sole purpose is to create long-
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term value for its shareholders.
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⊚ trueag
⊚ false
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5) The instrumental argument for the stakeholder theory of the firm says that companies perform better if the
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y consider the rights and concerns of multiple groups in society.
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⊚ trueag
⊚ false
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6) The normative argument for the stakeholder theory of the firm says that the stakeholder view is simply a mor
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e realistic description of how companies really work.
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⊚ trueag
⊚ false
ag
2|P a g e
ag ag ag ag ag
,7) Nonmarket stakeholders are those that engage in economic transactions with the company as it carries out it
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s primary purpose of providing society with goods and services.
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⊚ trueag
⊚ false
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8) Market stakeholders include nongovernmental organizations and business support groups.
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⊚ trueag
⊚ false
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9) Government can be considered both a market and a nonmarket stakeholder.
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⊚ trueag
⊚ false
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10) The interests of different stakeholders often coincide.
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⊚ false
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11) The first step of stakeholder analysis is to identify relevant stakeholders.
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⊚ trueag
⊚ false
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12) Some scholars have suggested that managers pay the most attention to stakeholders possessing the least salience.
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⊚ trueag
⊚ false
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13) The organization of a corporation‘s boundary-spanning functions is complex.
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⊚ trueag
⊚ false
ag
3|P a g e
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, 14) Businesses are increasingly trying to meet their commitments to multiple stakeholders.
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⊚ true
ag
⊚ false
ag
15) The external environment of business is static.
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⊚ true
ag
⊚ false
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MULTIPLE CHOICE - ag ag
Choose the one alternative that best completes the statemen
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t or answers the question.
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16) The relationship between business and society is most accurately described by which statement?
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A) Business is an unbounded entity within the larger bounded entity of society.
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B) Society is a distinct bounded entity within the larger bounded entity of business.
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C) Business is a distinct bounded entity separate from the bounded entity of society.
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D) Business is a distinct bounded entity within the larger bounded entity of society.
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17) According to general systems theory, boundary exchanges are exemplified by which of the following?
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A) An industrial company installs new equipment in its plant to comply with environmental regulations.
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B) A software company develops an application for a client.
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C) A purchasing department employee negotiates a price on parts with a supplier.
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D) All of these choices are correct.
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18) The inseparable relationship between business and society results in which of the following?
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A) All business decisions have a social impact.
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B) The vitality of business depends on society's actions and attitudes.
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C) The survival of business is independent of society.
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D) Both ―All business decisions have a social impact‖ and ―The vitality of business depends on society‘s actions and
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attitudes‖ are correct. ag ag
4|P a g e
ag ag ag ag ag
ag ag ag ag ag
, Chapter 1- ag
19 Answers are at the end of Each chapter Chapter 1
ag ag ag ag ag ag ag ag ag ag
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
1) A business is any organization that is engaged in making a product or providing a service for a profit.
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
2) The term stakeholder refers exclusively to the founders of a business organization.
ag ag ag ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
3) Businesses and society are independent of each other.
ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
4) The stakeholder theory of the firm argues that a firm‘s sole purpose is to create long-
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
term value for its shareholders.
ag ag ag ag
⊚ trueag
⊚ false
ag
5) The instrumental argument for the stakeholder theory of the firm says that companies perform better if the
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
y consider the rights and concerns of multiple groups in society.
ag ag ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
6) The normative argument for the stakeholder theory of the firm says that the stakeholder view is simply a mor
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
e realistic description of how companies really work.
ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
2|P a g e
ag ag ag ag ag
,7) Nonmarket stakeholders are those that engage in economic transactions with the company as it carries out it
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
s primary purpose of providing society with goods and services.
ag ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
8) Market stakeholders include nongovernmental organizations and business support groups.
ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
9) Government can be considered both a market and a nonmarket stakeholder.
ag ag ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
10) The interests of different stakeholders often coincide.
ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
11) The first step of stakeholder analysis is to identify relevant stakeholders.
ag ag ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
12) Some scholars have suggested that managers pay the most attention to stakeholders possessing the least salience.
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
13) The organization of a corporation‘s boundary-spanning functions is complex.
ag ag ag ag ag ag ag ag
⊚ trueag
⊚ false
ag
3|P a g e
ag ag ag ag ag
, 14) Businesses are increasingly trying to meet their commitments to multiple stakeholders.
ag ag ag ag ag ag ag ag ag ag
⊚ true
ag
⊚ false
ag
15) The external environment of business is static.
ag ag ag ag ag ag
⊚ true
ag
⊚ false
ag
MULTIPLE CHOICE - ag ag
Choose the one alternative that best completes the statemen
ag ag ag ag ag ag ag ag ag
t or answers the question.
ag ag ag ag
16) The relationship between business and society is most accurately described by which statement?
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A) Business is an unbounded entity within the larger bounded entity of society.
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B) Society is a distinct bounded entity within the larger bounded entity of business.
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C) Business is a distinct bounded entity separate from the bounded entity of society.
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D) Business is a distinct bounded entity within the larger bounded entity of society.
ag ag ag ag ag ag ag ag ag ag ag ag
17) According to general systems theory, boundary exchanges are exemplified by which of the following?
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A) An industrial company installs new equipment in its plant to comply with environmental regulations.
ag ag ag ag ag ag ag ag ag ag ag ag ag
B) A software company develops an application for a client.
ag ag ag ag ag ag ag ag
C) A purchasing department employee negotiates a price on parts with a supplier.
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D) All of these choices are correct.
ag ag ag ag ag
18) The inseparable relationship between business and society results in which of the following?
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A) All business decisions have a social impact.
ag ag ag ag ag ag
B) The vitality of business depends on society's actions and attitudes.
ag ag ag ag ag ag ag ag ag
C) The survival of business is independent of society.
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D) Both ―All business decisions have a social impact‖ and ―The vitality of business depends on society‘s actions and
ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag ag
attitudes‖ are correct. ag ag
4|P a g e
ag ag ag ag ag
