Deck 1: Market and Nonmarket Environments

Question 1

Nonmarket issues come from both external forces and the firm's actions.

Answer 1

True

Question 2

Nonmarket issues high on firms' agendas include environmental protection, health and safety, regulation and deregulation, intellectual property protection, international trade policy, antitrust as well as other issues such as human rights.

Answer 2

True

Question 3

In the nonmarket environment, legislation, regulation, administrative decisions, and public pressure are the result of competition involving individuals, activists, interest groups, and firms.

Answer 3

True

Question 4

Nongovernmental institutions include the news media that provides information to society as well as public sentiment composed of societal expectations and norms of behavior that arise from ethics and culture.

Question 5

Institutions include only principal government institutions and cannot be established by private parties.

Question 6

Change in the nonmarket environment does not come from market forces.

Question 7

In the market environment, strategies are intermediated by public and private institutions, whereas in the nonmarket environment, strategies are intermediated by markets.

Question 8

Renewed confidence in markets and the failure of socialist economic systems spurred a wave of privatization in both developed and developing countries.

Question 9

In formulating nonmarket strategies, managers may draw on the expertise of lawyers, communications specialists, Washington representatives, and community relations specialists.

Question 10

The long-run sustainability of competitive advantage requires managing effectively in the nonmarket environment.

Question 11

The nonmarket environment of a firm is characterized by four I's: independence, individuality, ideas and income.

Question 12

Firms have more control over their future in their nonmarket environment than they have in the markets in which they operate.

Question 13

One of the approaches to effectively manage nonmarket issues is to respond to nonmarket issues only when they are strong enough to force the firm to act.

Question 14

Effective management in the market environment is sufficient for superior performance of the firm over its competitors.

Question 15

All institutions represent a set of countries.

Question 16

Managers do not participate in the implementation of nonmarket strategies.

Question 17

Information is the basic unit of analysis and the focus of nonmarket action.

Question 18

Activities in the nonmarket environment may be voluntary, as when the firm cooperates with government officials or an environmental group, or involuntary, as in the case of government regulation or a boycott of a firm's product led by an activist group.

Question 19

Institutions are not unitary bodies.

Question 20

The nonmarket environment is characterized by the social, political, and legal arrangements that structure interactions outside of, but in conjunction, with markets and private agreements.

Question 21

________ is/are defined as the rules of the game in a society that shape human interactions and provide arenas in which interests seek to influence the outcomes on issues.

A) Institutions
B) Individualism
C) Collectivism
D) Issue identification

Question 22

As an issue progresses through its life cycle, management's range of discretion in addressing the issue correspondingly increases.

Question 23

The nonmarket environment of a firm is characterized by four I's: issues, interests, institutions, and ________.

A) innovation
B) information
C) ideas
D) independence

Question 24

All nonmarket issues pass through the five stages of the nonmarket issue life cycle.

Question 25

The first step that a nonmarket issue passes through is issue identification.

Question 26

Which of the following are government institutions?

A) labor unions
B) regulatory agencies
C) news agencies
D) for-profit organizations

Question 27

The nonmarket issue life cycle is a theory that relates the stage of development of an issue to its impact on a firm.

Question 28

Due to its importance for managerial and organizational performance, nonmarket strategy is the responsibility of ________.

A) managers
B) clerks
C) lobbyists
D) the board of directors

Question 29

The market environment of business includes ________.

A) social, political, and legal arrangements that structure interactions in conjunction with markets and contracts
B) interactions between firms, suppliers, and customers that are governed by markets and contracts
C) interactions between the firm and individuals, and interest groups that are intermediated by private institutions
D) interactions between the firm and government entities, and the public that are intermediated by public institutions

Question 30

________ pertains to what the interests and institutional officeholders know or believe about the issues and the forces affecting their development.

A) Independence
B) Individualism
C) Ideas
D) Information

Question 31

Which of the following characterizes advocacy groups?

A) They pursue issues because of the benefits that accrue to their members.
B) They monitor the activities of firms and call those activities to the attention of the media, government, and public.
C) They represent the interests of individuals, such as those affected by pollution.
D) They take direct action against firms to force them to change their policies or can appeal to the public for support.

Question 32

Special interest groups ________.

A) pursue issues because of the benefits that accrue to their members
B) monitor the activities of firms and call those activities to the attention of the media, government, and public
C) represent the interests of individuals, such as those affected by pollution
D) take direct action against firms to force them to change their policies or can appeal to the public for support

Question 33

________ include the individuals and groups with preferences about, or a stake in, the issue.

A) Institutions
B) Interests
C) Innovation
D) Information

Question 34

The progress of an issue is shaped by the actions of firms and other interests and by the characteristics of the institutions in whose arenas the issue is addressed.

Question 35

Which of the following characterizes the nonmarket component of business environment?

A) It includes those interactions between firms, suppliers, and customers that are governed by markets and contracts.
B) The interactions of firms typically involve voluntary economic transactions and the exchange of property.
C) Activities in the nonmarket environment may be voluntary or involuntary.
D) Effective management in the nonmarket environment is not a necessary condition for superior performance.

Question 36

Which of the following is a nonmarket issue high on firms' agendas?

A) intellectual property protection
B) channel selection
C) advertising and promotion
D) pricing strategies

Question 37

Firms typically deal with nonmarket issues in proportion to their potential impacts on ________.

A) human resources
B) inventory control
C) public relations
D) performance

Question 38

Which of the following characterizes the competition in a nonmarket environment?

A) Firms compete through their market or competitive strategies.
B) The competitive strategies are intermediated by markets.
C) Public pressure leads to competition involving individuals, activists, interest groups, and firms.
D) The nonmarket environment neither changes nor the issues on a firm's nonmarket agenda evolve.

Question 39

________ monitor the activities of firms and call those activities to the attention of the media, government, and public.

A) Advocacy groups
B) Activist groups
C) Special interest groups
D) Watchdog groups

Question 40

________ are the basic unit of analysis and the focus of nonmarket action.

A) Interests
B) Institutions
C) Issues
D) Information

Question 41

Which of the following is an example of a nongovernmental institution in the nonmarket environment?

A) WTO
B) the social media
C) the judiciary
D) the executive branch

Question 42

Which of the following is the first stage in the nonmarket issue life cycle?

A) interest group formation
B) legislation
C) issue identification
D) administration

Question 43

________ can take direct action against firms to force them to change their policies or can appeal to the public for support.

A) Special interest groups
B) Watchdog groups
C) Advocacy groups
D) Activist groups

Question 44

Describe the nonmarket issue life cycle. List and explain the different stages.

Question 45

Explain the different approaches used by managers to address nonmarket issues.

Question 46

Describe the nonmarket environment. Why has the nonmarket environment grown in importance and complexity over time?

Question 47

Explain, with examples, how nonmarket issues originate.

Question 48

Under the new theory of ________, firms could be held liable if their stock prices fell significantly when the firms' projections of future earnings had been favorable.

A) fraud on the market
B) fraud on the nonmarket
C) the common factor
D) collective deception

Question 49

Which of the following is an example of a global institution?

A) Department of Homeland Security
B) Environmental Protection Agency
C) Mercosur
D) Kyoto Treaty

Question 50

________ involves providing information to officeholders about the likely consequences of policy alternatives.

A) Corporate social responsibility
B) Channel selection
C) Lobbying
D) Public relations

Question 51

Which of the following is an example of an institution specific to the United States?

A) Congress
B) KORUS
C) Kyoto Treaty
D) News Media

Question 52

Describe, with examples, the characteristics of a nonmarket environment.

Question 53

Which of the following is the final stage in the nonmarket issue life cycle?

A) interest group formation
B) legislation
C) administration
D) enforcement

Question 54

Which of the following steps follows the identification of the nonmarket issue in the nonmarket issue life cycle?

A) enforcement
B) interest group formation
C) administration
D) legislation