BTF - Chapter 1.1

Both "Zesty Profits Inc." and "The Lemon-Aid Crew" can be defined as 'organisations' because they are social arrangements that share which three key characteristics?

• Profit, employees, and a vision.

• A physical location, a product, and customers.

• Collective goals, controlled performance, and a boundary separating them from their environment.

• A mission, a legal structure, and a management team.

The primary factor that classifies "Zesty Profits Inc." as a business, while "The Lemon-Aid Crew" is not, is its:

• price point for its product.

• use of financial investment to start up.

• primary orientation towards maximising owner wealth.

• formal vision statement.

If "The Lemon-Aid Crew" were a government-funded agency, its secondary objective would most likely be:

• Maximising the number of playgrounds built.

• Minimising the cost of providing its services.

• Achieving a surplus to reinvest.

• Increasing its number of volunteers.

The "two family friends" who invested in "Zesty Profits Inc." are best described as which type of stakeholder?

• Secondary stakeholders

• Lenders

• Primary stakeholders

• Customers

For Zesty Profits Inc., the local city council which issues its trading license would be a secondary stakeholder. What would be its primary expectation of the business?

• A high return on investment.

• Compliance with regulations (e.g., health and safety).

• Low-cost lemonade for council employees.

• Long-term employment opportunities.

A potential conflict of interest for Zesty Profits Inc. could arise between maximising profits for investors and:

• Paying suppliers a fair price for their organic lemons in a timely manner.

• Achieving its vision of becoming a recognised brand.

• Keeping accurate financial records.

• Investing in new product innovation.

Maximising the wealth of its investors is the stated goal of Avernanche plc. A similar goal is stated for Zesty Profits Inc. Identify which of the following is most likely to be Avernanche plc’s primary business objective.

• To increase the annual profit after tax by 125% in the next 10 years.

• To introduce an average of two new products each year.

• To double the share price within the next 10 years.

• To become the market leader in four market segments.

At the Annual General Meeting of Vortex plc, a major shareholder claimed the company was suffering from the symptoms of ‘satisficing’. In the context of the case study, whose behaviour does this best describe?

• Alex at Zesty Profits Inc.

• Sam at The Lemon-Aid Crew.

• Steve at Good-Enough Sips.

• The family friends who invested in Zesty Profits Inc.

If 'Satisficer' Steve was instead told his bonus was based purely on total sales income, regardless of cost, his objective would likely shift from satisficing to:

• Profit maximisation.

• Wealth maximisation.

• Revenue maximisation.

• Cost minimisation.

The statement "To be the most recognized premium beverage brand in the region" is an example of Zesty Profits Inc.'s:

• Mission

• Vision

• Goal

• Plan