Midterm Review

ABC Corporation recently held a series of executive meetings where company leaders discussed several “big-picture” questions about the business's future. These questions included “Is the company headed in the right direction?” and “Is the company likely to experience long-term success?” Which primary business activity were the company leaders a part of?

• financial analysis
• strategic management
• human resources management
• information management

Answer explanation

Strategic management is the process of planning, controlling, and organizing an organization or department. Strategic management helps a business determine how it can succeed and reach its goals over time. Holding a series of executive meetings to answer "big-picture" organizational questions is an example of strategic management, not financial analysis, human resources management, or information management. Financial analysis is the process of planning, maintaining, monitoring, controlling, and reporting the use of financial resources. Human resources management is the process of planning, staffing, leading, and organizing employees. Information management is the process of accessing, processing, maintaining, evaluating, and disseminating business knowledge, facts, or data.

What is the benefit of shared vision to an organization?

• it creates a competitive environment
• it ensures that the team's goals are achievable
• it serves as a guide for decision-making
• it supports a groupthink attitude

Answer explanation

When a shared vision exists, all members of the organization understand and support the organization's purpose. Successful organizations set goals and make decisions to fulfill the organization's purpose, which is based on the vision. A shared vision does not ensure that goals are achievable. Groupthink is a form of extreme cohesiveness that occurs when individuality and independent thinking within the group are discouraged. Competition doesn’t increase because of a shared vision. Unattainable goals and groupthink tend to create circumstances that hinder an organization's ability to achieve its purpose

Which of the following is a legal factor that may affect the business environment:

• market trends
• wage regulations
• international tensions
• interest rates

Answer explanation

Many external factors can affect the business environment. Laws that govern what businesses can and cannot do are legal factors. Wage regulations require businesses to follow certain laws in relation to the ways in which employees are compensated. For example, minimum-wage laws set the lowest amount of hourly wages that a business may pay its employees. Minimum-wage regulations are designed to protect employees from unfair treatment by businesses. If businesses fail to follow wage regulations, the government is likely to penalize them. Market trends are social factors that affect the business environment. International tensions are political factors that affect the business environment. Interest rates are economic factors that affect the business environment.

A good indication that you may be making an unethical choice is if you

• make excuses to justify your behavior
• attempt to be objective
• maintain confidential information
• disagree with the rules

Answer explanation

Making excuses means that you are trying to convince yourself that what you are doing or thinking of doing is okay—that you are justifying a wrong or inappropriate choice. Maintaining confidential information (unless it is harmful to others) and being objective are ethical behaviors. Simply disagreeing with certain rules does not always indicate that you are making an unethical choice.

Which of the following situations indicates that a marketer should conduct marketing research to resolve a problem:

• declining inflation
• testing new products
• monitoring competitors
• losing market share

Answer explanation

Marketing research is the systematic gathering, recording and analyzing of data about a specific issue, situation, or concern. Marketers often conduct marketing research when they want to determine why problems are occurring, such as market-share loss. Market-share loss is a problem because it usually indicates that the business is selling less and losing profits. In other situations, the business wants to obtain information about competitors, new products, new market opportunities, or economic conditions (e.g., inflation), which are not always problems for the business.

What marketing function directly affects how well a product will sell and the amount of money the business will make?

• channel management
• promotion
• product/service management
• pricing

Answer explanation

Marketing functions are interrelated activities that work together to get goods and services from producers to consumers. Pricing is the marketing function that involves determining and adjusting prices to maximize return and meet customers' perceptions of value. If customers believe that the product's value is worth the price, then the product is likely to sell well. If the product sells well, then the business earns revenue and a profit. Promotion is a marketing function that communicates information about goods, services, images, and/or ideas to achieve a desired outcome. Product/Service management is the marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities. Channel management is the marketing function that involves the processes by which marketers ensure that products are distributed to customers efficiently and effectively.

What element of the marketing mix involves considerations such as the types of brands that the business carries and the types of support services the business offers?

• place
• price
• product
• promotion

Answer explanation

The marketing mix is made up of a distinct blend of marketing elements—product, place, promotion, and price. The business must first determine the products that it wants to sell, which may include specific brands and support services (e.g., warranties, maintenance). Price is the marketing-mix element that involves determining the amount of money to ask in exchange for the business's products. The place element of the marketing mix focuses on the distribution of the products—getting the product to the right place at the right time. The promotion element of the marketing mix involves the use of various forms of communication to inform, persuade, or remind customers about the business's goods and services

A business determines that it can increase its market share 12 percent by promoting its goods and services to Hispanic females who are 18- to 34-years old. The business is segmenting the market on the basis of

• geographics
• psychographics
• demographics
• behavior

Answer explanation

Demographics are the physical and social characteristics of the population. A business that segments the market on the basis of demographics considers factors such as the age, gender, and ethnicity of the population. Psychographic segmentation is the division of a market on the basis of consumers' lifestyles and personalities, which are influenced by their behavior. Geographic segmentation involves dividing a market on the basis of location (e.g., zip code)

Maria is developing her marketing plan for her small, but growing, business. She notes that one of the advantages of her company is that her staff is highly creative and flexible; however, a primary limitation that she faces is that she does not have sufficient financial resources to expand her product line. In which component of the marketing plan would Maria place this information?

• financial statement
• promotional plan
• marketing mix
• SWOT analysis

Answer explanation

A marketing plan is a set of procedures or strategies for attracting the target customer to a business. A component of the marketing plan is the SWOT analysis, which describes the businesses strengths, weaknesses, opportunities, and threats. Because Maria is describing one of her business's strengths (highly creative and flexible staff) and one of her business's weaknesses (lack of financial resources), she is working on the SWOT analysis. The promotional plan is the set of procedures or strategies for the business's promotional efforts. The marketing mix is the four elements of marketing— product, place, promotion, and price. A financial statement is a summary of accounting information.

Which of the following is an external threat that a company might identify while conducting a situation analysis:

• increasing GDP
• rising inflation rate
• falling interest rates
• declining unemployment

Answer explanation

A situation analysis is a determination of a company's current business situation and the direction in which the company is headed. When a company conducts a situation analysis, it evaluates many internal and external factors. Some external factors that a company evaluates are the economic indicators that affect the overall health of the economy, such as the interest rates, the unemployment rate, and the inflation rate. Inflation is the rapid rise in prices. Rising inflation is a threat to a company because customers have less money to spend on the company's products, which can negatively impact its sales. In addition, the company may also need to spend more money for raw materials, which can lower the company's profitability. When interest rates fall, customers are more likely to use credit or obtain loans to purchase goods and services, which may benefit the company. Likewise, an increase in GDP and a decline in unemployment indicate a strong economy in which customers are spending their money, which may positively impact on the company's sales