Question 1

For a small business, which step will increase the chance for success of a strategic alliance?

Accepted Answer

Ensuring the alliance is a "win-win" opportunity is crucial as it aligns the interests of both parties, fostering cooperation and mutual benefit, which are essential for the success of a strategic alliance.

Question 2

One benefit of a public company that it allows shareholders to receive dividends without:

Accepted Answer

Public companies are subject to double taxation which means that the company is taxed on its profits and then shareholders are taxed again on any dividends they receive. However, shareholders still receive dividends despite this double taxation. Options A and B are incorrect as shareholders are still required to pay taxes on any dividends they receive. Option D is incorrect as partnership taxation does not apply to public companies.

Question 3

Collin's Classic for Children with Cancer is a non-profit organisation that sells shirts.The organisation will be taxed as a ____________.

Accepted Answer

Non-profit organizations are typically exempt from paying taxes as they are established for charitable purposes and not for profit-making.

Question 4

Which organisational form would be best if the new company owners intend to provide extensive fringe benefits for owners or employees that would not be treated as taxable income to employees?

Accepted Answer

A company (corporation) can provide extensive fringe benefits to employees, including owners, which can be structured in a way that they are not treated as taxable income to the employees, unlike other organizational forms.

Question 5

The limited liability company form of organisation

Accepted Answer

A limited liability company (LLC) avoids double taxation because it is typically taxed as a pass-through entity, meaning the income is only taxed once at the individual level, unlike corporations which face double taxation at both corporate and individual levels.

Question 6

Emily has very little money with which to start her business so she wants to keep the cost of forming her company as low as possible.Which form of ownership would you recommend for Emily?

Accepted Answer

Sole proprietorship is the simplest and cheapest form of ownership to set up. This form of ownership doesn't require legal and registration fees, and there's no need for costly legal documents. As a sole proprietor, Emily would have full control of her business and no need to share profits with anyone else.

Question 7

The strategic alliance between The Centre for Systems Management and Technovative Marketing is an example of how:

Accepted Answer

The answer of The strategic alliance between The Centre for...

Question 8

Anna makes delicious baked goods but has no retail space.She has contracted with a local grocer to sell her wares in the grocery store.This arrangement is known as a(n):

Accepted Answer

The arrangement between Anna and the local grocer is a strategic alliance. A strategic alliance is a cooperative agreement between two or more businesses to work together for mutual benefit. In this case, Anna benefits from having a retail outlet for her baked goods while the grocery store benefits from offering fresh, delicious products to their customers without having to make them themselves.

Question 9

The two dimensions of management control of a small company usually involve which individuals?

Accepted Answer

Both shareholders and corporate officers are usually involved in the two dimensions of management control of a small company. Shareholders have the right to vote on major decisions such as electing the board of directors and approving significant financial transactions. Corporate officers, on the other hand, are responsible for implementing these decisions and managing the day-to-day operations of the company. Therefore, both groups play a crucial role in the management and direction of a small company.

Question 10

Frank would like to avoid personal financial loss if his business idea does not work.Which form of ownership would you suggest?

Accepted Answer

Choosing a company structure (such as a limited liability company or a corporation) provides liability protection for Frank's personal assets. If the business fails, Frank would only be at risk of losing the money he invested in the company and not his personal savings or property.

Question 11

Large manufacturers have been known to form strategic alliances with small manufacturers in order to benefit from the smaller businesses:

Accepted Answer

The answer of Large manufacturers have been known to form...

Question 12

Glory, an employee of a company, caused a traffic accident while on company business.Who will pay for the damages?

Accepted Answer

The company will be liable for any damages caused by its employees while on company business. This is because employees are considered agents of the company and the company is responsible for their actions while performing their duties.

Question 13

A strategic alliance is:

Accepted Answer

A strategic alliance is an organisational relationship that links two separate businesses. This partnership can bring benefits such as sharing resources, reducing costs, or accessing new markets. It is a popular strategy in today's business environment as it allows companies to leverage each other's strengths and capabilities. Duplicate efforts or an unwieldy nature would not be desirable outcomes.

Question 14

Angela has asked 110 of her closest friends to invest in her company, promising them protection from personal liability.Which form of ownership would you recommend Angela use?

Accepted Answer

A limited liability company (LLC) would be the most appropriate choice for Angela's situation. It offers the personal liability protection she promised her investors, while also allowing for flexibility in management and taxation. Other options, such as a partnership or private company, may not offer the same level of protection from personal liability. A non-profit organisation may not be applicable if the business is intended to generate profits.

Question 15

In a limited partnership, which partner remains bound by all debts of the business?

Accepted Answer

In a limited partnership, the general partner is the one who remains bound by all debts of the business. This is because the general partner has unlimited liability, while the limited partners have limited liability and are not personally responsible for the debts of the business beyond their initial investment.

Question 16

Lauren, a partner in J & J Company, manages its day-to-day operations.She is considered to be a _____ partner.

Accepted Answer

A general partner is involved in the management and day-to-day operations of a partnership.

Question 17

Jane and Roy have a partnership with their company of JR Enterprises.Which statements reflect how the partnership pays taxes?

Accepted Answer

In a partnership, the business itself does not pay taxes. Instead, the income is passed through to the partners, who then report it on their individual tax returns.

Question 18

Ralph formed a company as a fund manager.He accepted money from his customers, promising to invest it and build cash value for them.Instead, he kept the money for himself to enjoy a lavish lifestyle.The court removed liability protection from his corporate entity because the incorporation had been used to perpetuate fraud.This is an example of:

Accepted Answer

Piercing the corporate veil is the legal concept of disregarding the limited liability protection of a corporation in cases of fraud or illegal activities committed by the company or its owners. In this scenario, Ralph misused the corporate entity to perpetuate fraud, and as a result, the court removed liability protection, meaning he could be held personally liable for the damages caused to his customers.

Question 19

Harvey would like to support his friend's new business financially but also wants to protect his assets in case the business fails.Which form of ownership would you recommend?

Accepted Answer

A limited partnership would be the best choice as it would allow Harvey to financially support his friend's business while also limiting his liability to the amount invested in the business. This means that if the business fails and incurs debts, Harvey's personal assets will not be at risk beyond his investment.

Question 20

A risk for a small business creating a strategic alliance with a larger company is:

Accepted Answer

A small business may be financially squeezed when partnering with a large company, as the cost of keeping up with the partner's standards and requirements may be too high for the small business to handle. This may result in the small business investing too much in the partnership without seeing a return on investment or losing control over their business decisions.

Quiz 8: The Organizational Plan: Teams, Legal Structures, Alliances, and Directors