Deck 3: Small Business Environment: Managing External Relations

Question 1

LaRue Hosmer's model for making ethical decisions is focused more on small business than big ones.

Answer 1

False

Question 2

Mutuality is the set of relationships and contacts with individuals and institutions a company establishes.

Answer 2

False

Question 3

Being a small business makes managing organizational culture harder than in larger businesses.

Answer 3

False

Question 4

The billboard principle is an ethical model that asks whether someone would be comfortable having his or her decision and name advertised on a billboard for the public to see.

Question 5

Small businesses high in social capital are less trusted when problems occur.

Question 6

Gaining legitimacy in small businesses is especially difficult for entrepreneurs seen as "different"-women,minorities,home-based businesses,or businesses started by young people.

Question 7

Compared to a corporation,a sole proprietorship is usually considered more legitimate by customers,suppliers,and investors.

Question 8

Gathering resources for a business is easier during economic recessions than during economic boom times.

Question 9

Sustainable entrepreneurship is an approach to the operation of the firm,the line of business of the firm,or both,which identifies or creates and then exploits opportunities to make a profit in a manner that minimizes the depletion of natural resources,maximizes the use of recycled material,improves the environment,or any combination of these outcomes.

Question 10

In innovation,it is mandatory for a person to be sure how a new idea is going to turn out.

Question 11

As the owner of a business,quickly admitting that the firm is in trouble indicates a lack of accountability.

Question 12

As a firm establishes a track record for performance,that performance,along with the goods or services it creates become key elements of the firm's and entrepreneur's identity.

Question 13

The goal of any small business owner is to manage external relations in order to minimize social capital.

Question 14

Small businesses are often the first to try something innovative.

Question 15

Universalism is an ethical model that suggests people get their ideas of right and wrong from their family,religion,education,and community.

Question 16

An ethical decision should reflect a decision-maker's real or presumed obligations to people and institutions in his or her firm and in its task environment.

Question 17

BATNA,or the "Best Alternative To a Negative Situation" happens when the best outcome is identified by the parties involved.

Question 18

Social networking helps build long-lasting relationships into a person's day-to-day business operations.

Question 19

In making moral decisions,it is possible to find oneself in the legal "right" but still unable to make a viable business decision by pursuing legal recourse.

Question 20

Organizational culture not only is the set of shared beliefs or basic assumptions but also include accepted ways of dealing with problems and challenges within a company.

Question 21

One emerging way to focus on your immediate environment is called the _______.These are the elements that make up the settings most helpful to promoting entrepreneurship.

A) entrepreneurial ecosystem
B) organizational identity
C) social capital effect
D) general environment

Question 22

The _____ of an organization will be a part of its task environment.

A) owners
B) board of directors
C) competitors
D) employees

Question 23

Following the BRIE model in starting a business,an entrepreneur creates a boundary within the environment,setting his firm apart from the rest of the environment.In doing this,the entrepreneur gives the firm an _____.

A) organizational citizenship
B) organizational identity
C) organizational diversity
D) organizational collusion

Question 24

Which of the following statements is true about the task environment?

A) The task environment of a firm is larger than its general environment.
B) This part of the environment is made up of those people a firm deals with every day.
C) It is extremely easy to recognize new trends and changes among the members of the task environment.
D) It is a part of the internal environment made up of employees,owners,and board of directors.

Question 25

_____ refers to the sum total of forces outside of an entrepreneur and a firm.

A) Environment
B) Organizational climate
C) Corporate governance
D) Social capital

Question 26

Lisa runs a dog grooming business and is always looking for new trends,reading articles,keeping notes,and talking to customers and suppliers about what is needed in the industry.What important function is Lisa performing?

A) Lisa is building social capitalism.
B) Lisa is recruiting for new employees.
C) Lisa is building an organizational culture.
D) Lisa is scanning the environment.

Question 27

Which of the following is typically a part of a firm's general environment?

A) The media of a country
B) The firm's board of directors
C) The politics and laws of a country
D) The firm's corporate allies

Question 28

Which of the following is an element of a firm's internal environment?

A) Customers
B) Suppliers
C) Unions
D) Board of directors

Question 29

_____ are considered as a part of the internal environment of a firm.

A) Employees
B) Suppliers
C) Competitors
D) Unions

Question 30

Factors such as the ages,races,and gender of customers would be an element of the firm's _____ environment.

A) general
B) internal
C) task
D) ownership

Question 31

_____ is best defined as the characteristics of a business,like trust,consistency,and networks that help make business operations smooth and efficient.

A) Social capital
B) Golden handshake
C) Intangible liability
D) Caveat emptor

Question 32

The general description for the processes and skills used in the management of a firm's interactions with people,organizations,and institutions outside of its boundary is called _____.

A) external relations
B) organizational structure
C) horizontal integration
D) social audit

Question 33

The economic sector in the general environment is primarily concerned about the:

A) trends in the mix of ages,races,and gender in society.
B) availability of raw materials and changes in weather and ecological forces.
C) availability of equity,credit,and employment in a country.
D) shared interests and differences between subcultures.

Question 34

_____ target specific industries and professions.

A) Trade magazines
B) Scholarly journals
C) Popular press magazines
D) Academic journals

Question 35

_____ refers to a set of shared beliefs,basic assumptions,or common,accepted ways of dealing with problems and challenges within a company that demonstrate how things get done.

A) Organizational portfolio
B) Organizational ergonomic
C) Organizational culture
D) Organizational layout

Question 36

Thomas has started a new business venture for which he has been using highly economical resources,such as the market research data available in public libraries,low-interest funds borrowed from national banks,and equipments hired on lease.This technique used by Thomas to overcome resource constraints in his start-up firm is best known as _____.

A) caveat emptor
B) moonlighting
C) bootstrapping
D) collective bargaining

Question 37

Which of the following is an element of a firm's external environment?

A) Employees
B) Suppliers
C) Owners
D) Board of directors

Question 38

Small business owners should be scanning their environment looking for upcoming trends.Beyond trend-spotting,the other key scanning ability is to find the resources you need from the environment to build your business.The key to identifying resources comes from the acronym ________,which stands for the different types of resources.

A) BANTA
B) ISO
C) SNAFU
D) PROFIT

Question 39

By efficiently managing external relations,small businesses typically aim at creating _____.

A) economies of scale
B) social capital
C) opportunity costs
D) skills inventory

Question 40

Which of the following statements is true about the general environment?

A) This part of the external environment is smaller than the task environment.
B) The task and internal environments of a firm are independent of its general environment.
C) It excludes the broad trends of the environment affecting law,government,and politics.
D) It always needs to be considered in terms of its social supports and institutional supports.

Question 41

A firm can best increase its product-based legitimacy by:

A) using voice mail or answering machine to provide customer service.
B) avoiding a physical location to conduct the business.
C) selling the product under its generic name instead of a brand name.
D) placing interviews,articles,or columns in media about the product.

Question 42

Which of the following statements is true of social capital?

A) Social capital cannot be found on a business's balance sheet.
B) The less of social capital a firm has,the greater the value of the firm.
C) Social capital is capital in the same sense that cash or land can be.
D) Small businesses high in social capital are treated less fairly by regulators.

Question 43

Having well-known or well-regarded owners,employees,supporters,or spokespeople primarily increases a firm's _____ legitimacy.

A) cost-based
B) organization-based
C) people-based
D) competition-based

Question 44

Which of the following statements is true of legitimacy indicators?

A) A small business cannot survive without incorporating all the 30 characteristics of the three types of legitimacy indicators.
B) Part of legitimacy and building trust for a firm comes from changing the legitimacy characteristics frequently.
C) It is easy for businesses to incorporate all the elements of the different types of legitimacy indicators.
D) Repeating one legitimacy characteristic daily does more to build social capital than changing the legitimacy characteristics.

Question 45

Jake is a small business owner of Macho Doors,a manufacturer and installer of garage doors.His business has earned the reputation as being reliable,trustworthy,and one that makes high quality,long-lasting doors.However,with rising gasoline and wood prices,Jake is finding it hard to maintain the existing quality standards.If he continues with the existing quality standard,his profit margins will go down and he will not be able to hike his employees' salaries; if he inserts panels of lower quality wood the reputation of his business will be lost.These are typically _____ legitimacy building features.

A) product-based
B) capital-based
C) people-based
D) industry-based

Question 46

The _____ is the most important element of social capital to customers and supporters of a business,such as bankers,lawyers,and suppliers.

A) union
B) government
C) competitor
D) owner

Question 47

Which of the following is not one of the five skills for managing relations with the environment?

A) Building legitimacy
B) Bootstrapping
C) Achieving sustainability
D) Making ethical decisions

Question 48

Documentation and demonstration offered for products are product-based legitimacy indicators of _____.

A) intellectual property
B) experiential supports
C) industry leadership
D) business network membership

Question 49

Which of the following legal forms of business is typically considered the least legitimate?

A) Corporation
B) Limited liability company
C) Sole proprietorship
D) Partnership

Question 50

Which of the following legitimacy-building features does having trademarks,service marks,patents,or copyrights typically indicate?

A) Organizational size
B) Customer service
C) Intellectual property
D) Public listings

Question 51

The owner of Elixir Force Inc.received the most prestigious corporate award and was also titled as "the most outstanding new entrepreneur of the year." In the context of people-based legitimacy,this is typically an indicator of:

A) brand equity.
B) public recognition.
C) business network membership.
D) experiential supports.

Question 52

Which of the following statements about small businesses high in social capital is true?

A) They are given the benefit of the doubt when problems occur.
B) They are less trusted than businesses that are low in social capital.
C) Their balance sheets will fail to appeal to investors.
D) They are checked up on by regulators frequently.

Question 53

Which of the following is the most appropriate approach to building organization-based legitimacy?

A) Creating a company's own code of ethics
B) Sharing the business phone line with home
C) Operating the business on weekends only
D) Personally designing websites instead of using professional help

Question 54

_____ means that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers,suppliers,investors,or competitors.

A) Bureaucracy
B) Illiquidity
C) Legitimacy
D) Insolvency

Question 55

A firm will be recognized for its industry leadership,a product-based legitimacy building characteristic,typically when:

A) its employees dress in casual attire to work.
B) its service standards are benchmarked by competitors.
C) it refuses to use outdated technology.
D) it uses common technologies of the industry.

Question 56

Another approach to building organization-based legitimacy is the creation and display of a(n)________.

A) company code of ethics
B) Golden Rule
C) ethical dilemma
D) general environment

Question 57

Which of the following will cause the maximum damage to an organization's legitimacy?

A) Promoting knowledge about the organization to customers
B) Having people in the organization that customers know and respect
C) Partnering with reputed businesses
D) Directing customer calls to answering machine or voice mail

Question 58

Erion Inc.is an e-commerce company that sells its food products under the brand name Heal Meal.Its business partners have planned to enter into a strategic alliance with a well-reputed retailer in the Asian market in order to expand its operations to the Asian continent.Which of the following is a reason for the company having a lack of organization-based legitimacy in the Asian market?

A) The absence of a physical location to conduct business
B) It's partnership with another well-reputed business
C) The use of a brand name to sell products
D) Its legal form as a partnership firm

Question 59

The _____ is given by the U.S.Government to businesses and nonprofit organizations that have been judged outstanding in quality leadership; strategic planning; customer and market focus; measurement,analysis,and knowledge management; human resource focus; process management; and results.

A) Economic Times Award
B) Ron Brown Award
C) Malcolm Baldrige National Quality Award
D) Golden Peacock National Quality Award

Question 60

Social capital is the major component of what accountants call _____,and it can be found on business's balance sheet.

A) doubtful debt
B) goodwill
C) bequest
D) excise duty

Question 61

There are costs to firms for their illegal and even unethical behaviors.Which of the following is seen as the most damaging and costly to these businesses?

A) Government fines
B) Employee turnover
C) Corrective actions
D) Government oversight

Question 62

_____ refers to a situation where a person's values are in conflict,making it unclear whether a particular decision is the right thing to do.

A) Cognitive resonance
B) Mutuality
C) Ethical dilemma
D) Effectuation

Question 63

The questions on who will be hurt and how much,who will benefit and how much,what does the owner or the firm owe others,and what do others owe the owner and the firm are typically asked when:

A) the best solution for a moral problem is being implemented.
B) the progress of a solution to a moral problem is being monitored.
C) a variety of alternatives is to be generated to handle a moral problem.
D) the moral dimension of a problem is to be determined.

Question 64

Interacting with others in order to build relationships useful to a business refers to _____.

A) networking
B) moonlighting
C) brainstorming
D) bootstrapping

Question 65

Roller-Tell Inc.,a major supplier of components to the automobile industry,has recently confronted a crisis as one of its manufacturing units has been forcefully shut down by the local union.As a result,the company has been unable to meet the customer demands appropriately.As the owner of the business,the most appropriate way for the firm to handle this crisis is to:

A) delegate as much as possible of the crisis management to the employees.
B) make the process of dealing with the problem as open as possible.
C) keep employees,customers,and suppliers isolated from the crisis.
D) avoid admitting that there is any issue hampering production.

Question 66

Which of the following includes a three-step process that has been adopted to help small businesses make better and more ethical decisions?

A) Green audit
B) LaRue Hosmer's model
C) The gold standard for crisis leadership
D) The Machiavellian approach

Question 67

Which of the following questions in LaRue Hosmer's approach to ethical decision making best reflects a decision maker's real or presumed obligations to people and institutions in a firm and in its task environment?

A) What does the decision maker (or the firm)owe others?
B) What do others owe the decision maker (or the firm)?
C) Who will be hurt (and how much)as a consequence of the decision?
D) Who will benefit (and how much)as a consequence of the decision?

Question 68

Justin is a sales executive at a manufacturing company.One of his clients who purchases products from him at a higher price than that quoted by competitors is facing financial problems.Since Justin's promotion depends on his achieving the sales target,he cannot decide whether he should inform his client about the lower prices its competitors are paying.Justin is facing a situation known as _____.

A) effectuation
B) social loafing
C) cognitive resonance
D) ethical dilemma

Question 69

Which of the following statements is true about caveat emptor?

A) As a legal principle,the phrase has been routinely approved.
B) It is often the first line of defense by producers of shoddy merchandise.
C) Using it as a defense puts the entrepreneur who uses it in a positive light.
D) A business using it as a principle is considered highly legitimate and accountable.

Question 70

A system of values people use to determine whether actions are right or wrong is referred to as _____.

A) bootstrapping
B) pathos
C) green auditing
D) ethics

Question 71

Sylvia had helped Jonathan,one of her previous subordinates,in establishing his business by referring him to an important venture capitalist.As an appreciation of her help,Jonathan has now agreed to hire and personally mentor her son as a trainee in his company.Both Sylvia and Jonathan are typically exhibiting _____.

A) collectivism
B) bicameralism
C) mutuality
D) autocracy

Question 72

To help and prepare small businesses to handle crisis they have been recommended to avoid:

A) planning to stay in business.
B) protecting their investment.
C) talking about the crisis to their people.
D) planning only after the crisis has occurred.

Question 73

_____ is an approach to operating a firm or a line of business which identifies,creates,and exploits opportunities to make a profit in a manner that can minimize the depletion of natural resources,maximize the use of a recycled material,or improve the environment.

A) Serial entrepreneurship
B) Venture capitalism
C) Sustainable entrepreneurship
D) Corporate intrapreneurship

Question 74

Social networking builds long-lasting relationships.Most entrepreneurs start with the Big 3 social networks,which are:

A) Instagram,LinkedIn,and Facebook.
B) LinkedIn,Twitter,and Instagram.
C) Twitter,Facebook,and LinkedIn.
D) Facebook,Tumblr,and LinkedIn.

Question 75

_____ means "let the buyer beware," and is a philosophy sometimes used by businesses to put the burden for consumer protection onto a customer.

A) Caveat emptor
B) Habeas corpus
C) Laissez faire
D) Persona grata

Question 76

Ivan has recently started his new business venture,and he has been busy visiting trade exhibitions,business organizations,electronic business forums,and his previous colleagues in order to build contacts.This will help him use their expertise to the benefit of his business.Ivan is typically working on building a _____.

A) social network
B) concern
C) focus group
D) global common

Question 77

Jake is a small business owner of Macho Doors,a manufacturer and installer of garage doors.His business has earned the reputation as a reliable,trustworthy business that makes high quality,long-lasting doors.However,with rising gasoline and wood prices,Jake is finding it hard to maintain the existing quality standards.If he continues with the existing quality standard,his profit margins will go down and he will not be able to hike his employees' salaries; if he inserts panels of lower quality wood the reputation of his business will be lost.The situation that Jakes faces is typically described as a(n)_____.

A) mutuality
B) ethical dilemma
C) caveat emptor
D) cognitive dissonance

Question 78

_____ is a certification standard from the U.S.Green Building Council for buildings that are environmentally friendly.

A) LEED
B) ESOP
C) ISO
D) BATNA

Question 79

The CEO at River Castle Inc.asked the employees to prepare a report on ways in which the company could become more environmental friendly.The reports revealed areas in which the company had been unnecessarily adding to its carbon footprint and consuming excessive energy due to faulty machines.As a corrective action,all the faulty and outdated equipment were replaced with efficient equipment.This is an example of a(n)_____.

A) arraignment
B) green audit
C) positive feedback
D) bootstrap paradox

Question 80

Which of the following is best avoided in handling a business crisis?

A) Appointing an outside professional,such as a lawyer,as a firm's spokesperson
B) Communicating facts to the employees and customers
C) Mixing crisis management with the everyday management of a firm
D) Admitting that the company is in trouble as quickly as possible