LER 427 Exam 1 Sample Questions PDF

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LER 427 Exam 1 Sample Questions Professor Dorothea Roumpi...

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1. ______ is the amount a business earns after deducting what it spends for salaries and other expenses. a. Profit (Know what revenue, expenses, profit, stocks, dividends, etc are) 2. Last year, Archer Electronics reported revenues of $34 million while its total expenses were $10 million. Archer reported: a. Profits of $24 million 3. A common characteristic of most entrepreneurs is that they: a. Accept the risks involved in starting and managing a business 4. Which of the following policies would tend to foster entrepreneurship? a. Develop policies and practices that reduce corruption 5. ______ comprise a relatively small percentage of all business but account for about 80% of U.S. business receipts a. Corporations (C Corporations) 6. To many businesspeople, one of the major attractions of a sole proprietorship is: a. Leaving a legacy 7. Limited partners taking over one of the general partners positions as they temporarily leave: a. Cannot participate in the management of the partnership (Limited partners DO NOT have managerial responsibilities.) 8. What are the 3 components of the AFI framework? a. Analysis, Formulation, Implementation (Analysis = SWOT) 9. Mature and stable market, takes conservative view on change, focus on improving efficiency of established processes rather than innovating: a. Defender (Defenders = More mature, established markets. Resist change, do not invest a lot of money in R&D, want to defend the current market share that they have. Prospectors = Looking to make changes, invest in R&D/technology/innovation but not always making the most profits. Analyzers = Somewhere in between defenders and prospectors. Not the first mover, but follow change. The majority. Reactors = Defenders to an extreme. Resist a lot of change, the last ones to make a change IF they even make a change. If they don’t, they will probably be the ones to fail in the future)

10. Left-handed professional golf clubs priced 150% higher than the average professional club: a. Has a narrow scope of operations, competes based on the uniqueness of the product, and thus has a focused differentiation strategy. **MEMORIZE the scope of operations chart and what goes where. 11. In an industry, the threat of entry is low when: a. Capital requirements are high (less people able to enter because of the high costs involved with starting) 12. A company with resources that are valuable but they are not rare has: a. Competitive parity (Applying the VRIO Framework chart) 13. ______ refers to setting work standards and schedules necessary to implement a company’s tactical objectives. a. Operational planning KNOW DEFINITIONS OF STRATEGIC PLANNING (long term goals/objectives), TACTICAL PLANNING (breaking down long term goals/objectives into specific tactics), OPERATIONAL PLANNING (schedules, standards, etc.), AND CONTINGENCY PLANNING (plan B, how to react if people are unhappy) 14. According to the rational decision making, which of the following questions is NOT one of the three main criteria used when evaluation alternatives and selecting a solution? a. Will others support this solution? Rational Model of Decision-Making– know stages 15. According to the intuition model of decision making, ______ is knowledge/information gained through experience that is difficult to express or to put into words. a. Tacit knowledge KNOW intuition, holistic hunch, explicit knowledge, and tacit knowledge. 16. Bias influencing vacation decisions – overheard colleague talking at work about a destination: a. Availability bias (Utilizing information that is readily available in our mind) KNOW decision making biases (confirmation bias, overconfidence bias, availability bias, representativeness bias, anchoring bias, framing bias, escalation of commitment bias) 17. The leader at Joe’s organization believes that all orgs should overstate their expenses in order to pay less income tax. What trait is this leader exhibiting? a. Machiavellianism (Don’t care about morals or the process, just the end goal.)

KNOW psychopathy (lacking empathy/guilt), narcissism (self-centered) 18. Task environment approach that refers to the extent to which the environment of an org can be characterized as stable or turbulent. a. Environmental dynamism (3 forces that influence success of an org – ENVIRONMENTAL: munificence (external has enough resources to sustain in the future), complexity (number and variety of activities in external environment **unlikely to be on exam), and dynamism (can the org predict changes and trend in environment).) 19. According to the agency theory, which of the following is NOT a basic assumption about agents? a. Agents realize that by serving the interests of the shareholders, they are serving their own interests IMPORTANT TO KNOW THE ASSUMPTIONS OF AGENCY THEORY. 20. Diffusing innovation is part of the ______ role of the board of directors. a. Resource dependence...