1
,1) nh is nhmoney nhthat nhan nhorganization nhbrings nhin nhthrough nhthe nhsale nhof nhits nhgoods nhand
nhservices.
A) Competitive nhadvantage
B) Revenue
C) Sales
D) Capital
nhinvestmentn Answer:
h
nhB
Explanation: nhRevenue nhis nhthe nhmoney nha nhcompany nhbrings nhin nhthrough nhthe nhsale nhof nhgoods nhand
nhservices.nhDifficulty: n h 1: nhEasy
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
2) Why nhis nhthe nhlink nhbetween nhrisk nhand nhreward nhcritical nhfor nha nhbusiness?
A) It nhis nha nhkey nhaspect nhof nhsocial nhresponsibility
B) It nhprovides nhopportunities nhfor nhnot-for-profit nhorganizations nhto nhstay nhin nhbusiness
C) It nhis nhessential nhto nhthe nhcounter-cyclical nhbusiness nhmodel
D) It nhprovides nhincentive nhto nhtake nhon nhthe
nhrisknhAnswer: n h D
Explanation: n h Without nhthe nhpromise nhof nhrewards, nhbusinesses nhwould nhhave nhno nhincentive nhto nhtake
nhon nhthenhrisks. nhAnd nhwithout nhentrepreneurs nhand nhcompanies nhwilling nhto nhaccept nhrisk, nhlittle nhwould
nhget nhdone nhin nhtheneconomy.
h
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
3) A(n) is nha nhframework nhof nhhow nha nhbusiness nhintends nhto nhgenerate nhrevenue.
A) business nhmodel
B) strategic nhmanagement nhtool
C) profitability nhanalysis
D) competitive
nhadvantagenhAnswer: n h A
Explanation: nhA nhcompany's nhbusiness nhmodel nhis nha nhclear, nhsimple nhoutline nhof nhhow nhthe nhbusiness
nhintendsnhto nhgenerate nhrevenue.
Difficulty: nh nh n h 1: nhEasy
AACSB: n h Analytical nhthinking
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
2
,4) nh is nhthe nhterm nhused nhto nhdescribe nhthe nhdifference nhbetween nhrevenue nhand nhexpenses.
A) Profit
B) Interest
C) Sales
D) Owner's
nhequitynhAnswer:
nhA
Explanation: n h Profit nhis nhthe nhamount nhof nhmoneynhleft nhover nhafter nhall nhthe nhcosts nhinvolved nhin nhdoing
nhbusiness,nhhave nhbeen nhdeducted nhfrom nh revenue.
Difficulty: n h 1: nhEasy
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
5) nh refers nhto nhsome nhaspect nhof nha nhproduct nhor nhcompany nhthat nhmakes nhit nhmore nhappealing
nhto nhtargetnhcustomers.
A) Competitive nhadvantage
B) Economies nhof nhscale
C) Horizontal nhintegration
D) Vertical
nhintegrationnhAnswer:
nhA
Explanation: n h Competitive nhadvantage nhrefers nhto nhsome nhaspect nhof nha nhproduct nhor nhcompany nhthat
nhmakes nhitnhmore nhappealing nhto nhtarget nh customers.
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
6) Which nhtype nhof nhorganization nhseeks nhto nhoperate nhefficiently nhand nheffectively nhto nhachieve
nhits nhgoalsnhwithout nhfocusing nhon nhprofit nhas nha nhmotive?
A) Business nhintermediary
B) Nonprofit nhorganization
C) Service nhbusiness
D) Goods-producing
nhbusinessnhAnswer: n h B
Explanation: nhNot-for-profit nhorganizations nh(also nhknown nhas nhnonprofit nhorganizations) nhsuch
nhasnhmuseums, nhmost nhuniversities, nhand nhcharities nhdo nhnot nhhave nha nhprofit nhmotive.
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
3
, 7) If nhindividuals nhand nhcompanies nhbelieve nhthey nhcan nhpursue nhrewards nhwithout nhfacing nhthe
nhrisks nhthat nhshould nhbe nhattached nhto nhthose nhpursuits, nhthey nhare nhmore nhlikely nhto nhengage nhin
nhirresponsible nhand nhevenn unethical nhbehavior. nhThis nhsituation nhis nhknown nhas nha(n) .
h
A) moral nhhazard
B) professional nhdilemma
C) barrier nhto nhentry
D) competitive
nhadvantagenhAnswer: n h A
Explanation: n h If nhindividuals nhand nhcompanies nhbelieve nhthey nhcan nhpursue nhrewards nhwithout
nhfacing nhthe nhrisks nhthat nhshould nhbe nhattached nhto nhthose nhpursuits, nhthey nhare nhmore nhlikely nhto
nh engage nhin nhirresponsible nhandn even nhunethical nhbehavior–a nhsituation nhknown nhas nhmoral nhhazard.
h
Difficulty: n h 2: nhModerate
AACSB: n h Ethical nhunderstanding nhand nhreasoning
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
8) How nhdo nhbusinesses nhgenerate nhrevenue nhand nhsatisfy nhthe nhneeds nhof nhthe nhcustomers?
A) By nhcontinuously nhadding nhvalue nhduring nhproduct nhcreation
B) By nhexpanding nhgeographic nhreach nhas nhoften nhas nhpossible
C) By nhlimiting nhthe nhflow nhof nhgoods nhin nhthe nhfree-market nheconomy
D) By nhoffering nhproducts nhat nhthe nhlowest nhprices
nhpossiblenhAnswer: n h A
Explanation: n h A nhgood nhway nhto nhunderstand nhwhat nhany nhbusiness nhdoes nhis nhto nhview nhit nhas nha
nhsystem nhfor nhsatisfying nhcustomers nhby nhtransforming nhlower-value nhinputs nhinto nhhigher-value
nhoutputs. nhAt nhevery nhstage,n a nhcompanynhadds nhvalue nhto nhcreate nhthe nhproduct nhin nha nhwaynhthat nhmakes nhit
h
nhappealing nhto nhthe nhnext nhcustomer nhinn
the nhchain.
h
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
9) A nhbusiness nhis nhany nhprofit-seeking nhorganization nhthat nhprovides nhgoods nhand nhservices
nhdesigned nhton satisfy nhcustomers' nhneeds.
h
Answer: n h TRUE
Explanation: n h In nha nhgeneral nhsense, nhbusiness nhcan nhbe nhdefined nhas nhany nhprofit-seeking
nhorganization nhthatn provides nhgoods nhand nhservices nhdesigned nhto nhsatisfy nhcustomers' nhneeds.
h
Difficulty: n h 1: nhEasy
AACSB: n h Application nhof nhknowledge
LO: n h 1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
4
,1) nh is nhmoney nhthat nhan nhorganization nhbrings nhin nhthrough nhthe nhsale nhof nhits nhgoods nhand
nhservices.
A) Competitive nhadvantage
B) Revenue
C) Sales
D) Capital
nhinvestmentn Answer:
h
nhB
Explanation: nhRevenue nhis nhthe nhmoney nha nhcompany nhbrings nhin nhthrough nhthe nhsale nhof nhgoods nhand
nhservices.nhDifficulty: n h 1: nhEasy
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
2) Why nhis nhthe nhlink nhbetween nhrisk nhand nhreward nhcritical nhfor nha nhbusiness?
A) It nhis nha nhkey nhaspect nhof nhsocial nhresponsibility
B) It nhprovides nhopportunities nhfor nhnot-for-profit nhorganizations nhto nhstay nhin nhbusiness
C) It nhis nhessential nhto nhthe nhcounter-cyclical nhbusiness nhmodel
D) It nhprovides nhincentive nhto nhtake nhon nhthe
nhrisknhAnswer: n h D
Explanation: n h Without nhthe nhpromise nhof nhrewards, nhbusinesses nhwould nhhave nhno nhincentive nhto nhtake
nhon nhthenhrisks. nhAnd nhwithout nhentrepreneurs nhand nhcompanies nhwilling nhto nhaccept nhrisk, nhlittle nhwould
nhget nhdone nhin nhtheneconomy.
h
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
3) A(n) is nha nhframework nhof nhhow nha nhbusiness nhintends nhto nhgenerate nhrevenue.
A) business nhmodel
B) strategic nhmanagement nhtool
C) profitability nhanalysis
D) competitive
nhadvantagenhAnswer: n h A
Explanation: nhA nhcompany's nhbusiness nhmodel nhis nha nhclear, nhsimple nhoutline nhof nhhow nhthe nhbusiness
nhintendsnhto nhgenerate nhrevenue.
Difficulty: nh nh n h 1: nhEasy
AACSB: n h Analytical nhthinking
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
2
,4) nh is nhthe nhterm nhused nhto nhdescribe nhthe nhdifference nhbetween nhrevenue nhand nhexpenses.
A) Profit
B) Interest
C) Sales
D) Owner's
nhequitynhAnswer:
nhA
Explanation: n h Profit nhis nhthe nhamount nhof nhmoneynhleft nhover nhafter nhall nhthe nhcosts nhinvolved nhin nhdoing
nhbusiness,nhhave nhbeen nhdeducted nhfrom nh revenue.
Difficulty: n h 1: nhEasy
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
5) nh refers nhto nhsome nhaspect nhof nha nhproduct nhor nhcompany nhthat nhmakes nhit nhmore nhappealing
nhto nhtargetnhcustomers.
A) Competitive nhadvantage
B) Economies nhof nhscale
C) Horizontal nhintegration
D) Vertical
nhintegrationnhAnswer:
nhA
Explanation: n h Competitive nhadvantage nhrefers nhto nhsome nhaspect nhof nha nhproduct nhor nhcompany nhthat
nhmakes nhitnhmore nhappealing nhto nhtarget nh customers.
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
6) Which nhtype nhof nhorganization nhseeks nhto nhoperate nhefficiently nhand nheffectively nhto nhachieve
nhits nhgoalsnhwithout nhfocusing nhon nhprofit nhas nha nhmotive?
A) Business nhintermediary
B) Nonprofit nhorganization
C) Service nhbusiness
D) Goods-producing
nhbusinessnhAnswer: n h B
Explanation: nhNot-for-profit nhorganizations nh(also nhknown nhas nhnonprofit nhorganizations) nhsuch
nhasnhmuseums, nhmost nhuniversities, nhand nhcharities nhdo nhnot nhhave nha nhprofit nhmotive.
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
3
, 7) If nhindividuals nhand nhcompanies nhbelieve nhthey nhcan nhpursue nhrewards nhwithout nhfacing nhthe
nhrisks nhthat nhshould nhbe nhattached nhto nhthose nhpursuits, nhthey nhare nhmore nhlikely nhto nhengage nhin
nhirresponsible nhand nhevenn unethical nhbehavior. nhThis nhsituation nhis nhknown nhas nha(n) .
h
A) moral nhhazard
B) professional nhdilemma
C) barrier nhto nhentry
D) competitive
nhadvantagenhAnswer: n h A
Explanation: n h If nhindividuals nhand nhcompanies nhbelieve nhthey nhcan nhpursue nhrewards nhwithout
nhfacing nhthe nhrisks nhthat nhshould nhbe nhattached nhto nhthose nhpursuits, nhthey nhare nhmore nhlikely nhto
nh engage nhin nhirresponsible nhandn even nhunethical nhbehavior–a nhsituation nhknown nhas nhmoral nhhazard.
h
Difficulty: n h 2: nhModerate
AACSB: n h Ethical nhunderstanding nhand nhreasoning
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
8) How nhdo nhbusinesses nhgenerate nhrevenue nhand nhsatisfy nhthe nhneeds nhof nhthe nhcustomers?
A) By nhcontinuously nhadding nhvalue nhduring nhproduct nhcreation
B) By nhexpanding nhgeographic nhreach nhas nhoften nhas nhpossible
C) By nhlimiting nhthe nhflow nhof nhgoods nhin nhthe nhfree-market nheconomy
D) By nhoffering nhproducts nhat nhthe nhlowest nhprices
nhpossiblenhAnswer: n h A
Explanation: n h A nhgood nhway nhto nhunderstand nhwhat nhany nhbusiness nhdoes nhis nhto nhview nhit nhas nha
nhsystem nhfor nhsatisfying nhcustomers nhby nhtransforming nhlower-value nhinputs nhinto nhhigher-value
nhoutputs. nhAt nhevery nhstage,n a nhcompanynhadds nhvalue nhto nhcreate nhthe nhproduct nhin nha nhwaynhthat nhmakes nhit
h
nhappealing nhto nhthe nhnext nhcustomer nhinn
the nhchain.
h
Difficulty: n h 2: nhModerate
AACSB: n h Application nhof nhknowledge
LO: nh1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
9) A nhbusiness nhis nhany nhprofit-seeking nhorganization nhthat nhprovides nhgoods nhand nhservices
nhdesigned nhton satisfy nhcustomers' nhneeds.
h
Answer: n h TRUE
Explanation: n h In nha nhgeneral nhsense, nhbusiness nhcan nhbe nhdefined nhas nhany nhprofit-seeking
nhorganization nhthatn provides nhgoods nhand nhservices nhdesigned nhto nhsatisfy nhcustomers' nhneeds.
h
Difficulty: n h 1: nhEasy
AACSB: n h Application nhof nhknowledge
LO: n h 1.1: nhExplain nhthe nhconcept nhof nhadding nhvalue nhin nha nhbusiness, nhand nhidentify nhfour nhuseful
nhways nhtonhcategorize nhbusinesses.
4
