Mgmt Test 2

Which of the following is the most likely reason that a business might choose to engage in corporate social responsibility:

• To improve its image

•   To cut expenses

•   To improve customer service

•   To grow its workforce

Answer explanation

Corporate social responsibility helps businesses improve their image by showing that they care about the community and are making a positive impact. It is especially useful if a business has received some bad publicity. Corporate social responsibility does not necessarily help a business to cut expenses, improve customer service, or grow its workforce.

Which of the following is an ethical issue that a business manager might encounter:

• Conflict of interest

• Balance of trade

• Span of control

• Return on investment

Answer explanation

Managers might encounter a conflict of interest if they are unable to be objective when making decisions about employees. For example, if they are friends with an employee, they might not want to give that person a negative performance evaluation even though it is justified. In those situations, managers should remove themselves in order to be ethical and allow a manager who is not a friend of the employee to conduct the evaluation. Balance of trade is the difference between the value of a nation's exports and its imports. Span of control is the number of workers reporting to a manager. Return on investment is income received from an investment in a business.

A furniture manufacturer has been receiving complaints about the safety of its Model BA2X baby crib. What is the first thing the manufacturer should do?

• Offer refunds to the customers.

• Make style improvements to the crib.

• Initiate a product recall.

• Ship the customers another crib.

Answer explanation

Quality management is the coordination of resources to ensure the degree of excellence of a process, good, or service. A product recall is the removal from the marketplace of a product that is defective or hazardous to consumers. Defective baby cribs can seriously injure or kill babies. Therefore, the manufacturer needs to immediately notify the public that the crib is hazardous, so owners know to stop using the crib. Notification is generally communicated to the public by letters, the media, signs in stores, on the company's web site, etc. The manufacturer should cease production and stop shipping the crib until the problem has been fixed. Style refers to the product's appearance, and is not a primary concern when dealing with a defective item. Offering refunds and shipping a fixed or different type of crib are secondary actions that the manufacturer can take after recalling the defective crib.

The Page-Turner Online Bookstore sent a questionnaire to its customers to determine how happy its customers are with its services. Customers' general responses indicated that the bookstore's lead and delivery times have improved a lot in the past three months. What aspect of quality has the bookstore evaluated?

• Customization

• Durability

• Safety

• Satisfaction

Answer explanation

If customers are not satisfied with a business's goods and services, they will start buying from competitors. Therefore, businesses need to continuously monitor customer-satisfaction levels and take steps to maintain or improve satisfaction levels. Quality improvement involves using a systematic approach to increase the levels of excellence in relation to a process, good, or service. In the example, the bookstore surveyed customers to obtain their opinions about the store's goods and services, which will provide input about the customers' level of satisfaction. The example does not indicate if product durability, safety, or customization were topics included in the survey.

What should a manager of a global company do to build relationships among international colleagues?

• Avoid using technology to communicate

• Provide cultural training for employees

• Keep employees largely separated

• Increase the focus on risk management

Answer explanation

It can be challenging for employees from different countries to form relationships and connect with one another. Cultural training can help employees understand the similarities and differences between their own culture and others. Understanding the other culture's approach can help the employees connect. While communicating in person is a better way to form relationships, technology cannot be avoided in global business. Keeping employees largely separated is also not realistic or productive. Finally, risk management is not necessarily related to building relationships among international colleagues.

One of the main purposes of a business plan is to help a new business

• establish objectives.

• organize procedures.

• set standards.

• create policies.

Answer explanation

A new business develops a business plan to establish its objectives, outline the steps it must take to achieve the objectives, and estimate its financial needs. Objectives are the goals that a business wants to achieve. For example, a new business might establish an objective of becoming the main provider of a specific product to area residents. Once the business establishes its goals, it can develop strategies to achieve them. Policies are general rules to be followed by company personnel. A procedure is the step-by-step process personnel follow in performing a specific task. Standards are used as a basis for comparing or judging goods or services.

One of the main reasons why owners develop a business plan before starting a new business is to

• estimate financial needs.

• organize production processes.

• identify qualified workers.

• prepare operating manuals.

Answer explanation

Before starting a new business, owners develop a business plan in order to establish objectives, outline the steps to take to achieve the objectives, and estimate financial needs. Estimating financial needs is extremely important because the owners need to know how much money it will take to operate the new business until it begins to generate a profit. If the owners do not have sufficient funds or cannot obtain those funds, it may not be feasible to start the business. Owners do not develop a business plan to organize production processes, identify qualified workers, or prepare operating manuals.

One of the purposes of developing a business plan before starting a new business is to

• create a safe work environment.

• organize the operation.

• understand the risks involved.

• identify a maintenance system.

Answer explanation

A business plan is the written document that is developed before starting a business. It explains the goals and objectives of the company and how the company intends to achieve those goals. Developing a business plan helps the business to understand the risks it might face, and develop strategies to overcome possible problems. All businesses face some type of risk, and being aware of that often helps the business to be successful. A business plan is not developed to organize the operation, create a safe work environment, or identify a maintenance system.

In which way can a start-up business benefit from writing a business plan?

• Assess a new product or promotion

• Place a value on the business

• Prepare for an expansion

• Define managers' roles

Answer explanation

A business plan can help a start-up company whose managers do not have clearly identified roles to establish who is expected to do what. When business owners want to sell an existing business, they write a business plan to help them set a value. An existing business can use a business plan to prepare for an expansion, such as an additional product line, office building, or group of employees. Writing a business plan forces an existing company to analyze the effectiveness of a new product or promotion.

The part of the business plan that gives an overview of the entire document is the

• company description.

• appendices.

• table of contents.

• executive summary.

Answer explanation

The executive summary is the most important part of the business plan because it gives an overview of the entire document. At the end of the document are the appendices—the extra bits of information that describe or lend support to a point made in the document. The table of contents lists all of the business plan's sections with corresponding page numbers, so that information is easily accessible. The company description accurately portrays the new company or venture, provides a history of the company, and shows the current business structure, among other things.