Question 1

Individuals or groups who are affected by or can influence an organization's operations are called
A)shareholders.
B)stakeholders.
C)organizational constituencies.
D)None of the above.

Accepted Answer

Stakeholders are individuals or groups who have a vested interest in an organization and can be impacted by or have the ability to influence its operations. This includes employees, customers, suppliers, government agencies, communities, and shareholders. Organizational constituencies are a narrower subset of stakeholders, typically referring to groups within the organization such as management or the board of directors.

Question 2

Over the past several decades,the composition of the typical board has shifted from one controlled by insiders to one controlled by outsiders.

Accepted Answer

False

Question 3

Which of the following might represent the goals of customers?
A)The company should provide high quality products and services at the most reasonable prices possible.
B)The company should maintain a healthy financial posture and a policy of on-time payment of debt
C)The company should produce a higher-than-average return on equity.
D)The company should provide goods and services with minimum environmental costs,increase employment opportunities,and contributing to social and charitable causes.

Accepted Answer

Customers typically seek high-quality products and services at reasonable prices, which directly benefits them.

Question 4

Many companies limit the number of board memberships their own board members may hold.

Accepted Answer

Many companies have rules and regulations in place to prevent potential conflicts of interest and to ensure that their board members can devote enough time and attention to their duties. One common restriction is a limit on the number of other board memberships a board member may hold, often around three or four.

Question 5

The desired ends toward which efforts are directed comprise
A)the organization's goals.
B)the mission.
C)the organization's objectives.
D)None of the above.

Accepted Answer

The desired ends toward which efforts are directed are the organization's goals, which represent the ultimate outcomes that an organization wants to achieve. The mission is a statement of the organization's purpose, and the objectives are specific, measurable steps that the organization takes to achieve its goals. Therefore, while the mission and objectives are important components of an organization's strategy, they do not represent the desired ends toward which efforts are directed.

Question 6

Objectives are specific,often quantified,versions of goals.

Accepted Answer

Objectives are measurable and specific versions of goals, providing clarity and direction for the achievement of goals.

Question 7

The utilitarian view of ethics suggests that anticipated outcomes and consequences should be the primary considerations when evaluating an ethical dilemma.

Accepted Answer

The utilitarian view prioritizes the maximum good for the maximum number of people, which is determined by anticipated outcomes and consequences.

Question 8

The triple bottom line refers to the notion that firms must maintain and improve social and ecological performance in addition to economic performance.

Accepted Answer

The triple bottom line concept emphasizes that businesses should strive for environmental, social, and economic sustainability in their operations.

Question 9

When additional insiders are added to outsider-dominated boards,CEO dismissal is more likely when corporate performance declines.

Accepted Answer

The answer of When additional insiders are added to outsider-dominated...

Question 10

Goals are verifiable and specific,and are developed so that management can measure performance.

Accepted Answer

The answer of Goals are verifiable and specific,and are developed...

Question 11

Adverse selection exists when the parties in an arrangement do not share equally in the risks and benefits.

Accepted Answer

Adverse selection occurs when one party in a transaction has more information than the other, often leading to an imbalance in the transaction, not necessarily unequal sharing of risks and benefits.

Question 12

Social responsibility refers to an individual's responsibility to make business decisions that are legal,honest,moral,and fair.

Accepted Answer

Social responsibility typically refers to the obligation of organizations or businesses to act in ways that benefit society, which includes legal, ethical, and philanthropic considerations, rather than focusing solely on individual decision-making.

Question 13

The competing priorities of an organization's stakeholders are known as
A)the organization's goals.
B)the mission.
C)the organization's objectives.
D)None of the above.

Accepted Answer

The competing priorities of an organization's stakeholders are not the same as the organization's goals or objectives, but rather refer to the various interests and demands of different parties involved with the organization. This includes shareholders, employees, customers, suppliers, regulators, and others, who may have conflicting goals and objectives that need to be balanced and aligned in order to achieve sustainable success for the organization. Therefore, the best answer is D, None of the above.

Question 14

Which of the following might represent the goals of shareholders?
A)The company should provide high quality products and services at the most reasonable prices possible.
B)The company should maintain a healthy financial posture and a policy of on-time payment of debt.
C)The company should produce a higher-than-average return on equity.
D)The company should provide goods and services with minimum environmental costs,increase employment opportunities,and contributing to social and charitable causes.

Accepted Answer

Shareholders are primarily interested in maximizing their return on investment, which is reflected in the company's return on equity. Option A reflects the goals of customers, option B reflects the goals of creditors, and option D reflects the goals of stakeholders or the broader community.

Question 15

When additional outsiders are added to insider-dominated boards,outsiders are more likely to pressure for corporate restructuring when performance is poor.

Accepted Answer

Research has shown that when outsiders are added to insider-dominated boards, they bring new ideas and perspectives to the decision-making process. When performance is poor, they are more likely to push for change and advocate for corporate restructuring.

Question 16

Corporate takeovers have been supported because of their ability to reduce the debt of acquired firms.

Accepted Answer

Corporate takeovers are usually facilitated in order to gain control of a competitor or to expand the acquirer's own business. While reducing the debt of the acquired firm may be a secondary benefit, it is not the primary reason for a takeover.

Question 17

Any purchase of a controlling quantity of shares of a firm by an individual,a group of investors,or another organization is known as a leveraged buyout (LBO).

Accepted Answer

A leveraged buyout (LBO) specifically refers to the acquisition of a company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. The assets of the company being acquired and those of the acquiring company are often used as collateral for the loans. The definition provided does not accurately describe an LBO, as it does not mention the crucial aspect of leveraging significant amounts of borrowed money to finance the acquisition.

Question 18

Creditors and suppliers typically share the same goals for the organization.

Accepted Answer

Creditors and suppliers may have different goals for the organization. Creditors may want to ensure that their loans are repaid on time, while suppliers may want to ensure that they are paid for goods and services provided. However, both groups have a vested interest in the financial health and success of the organization.

Question 19

A situation in which a firm's managers fail to act in the best interest of the shareholders is known as the stakeholder dilemma.

Accepted Answer

The stakeholder dilemma refers to a situation where the interests of stakeholders, such as shareholders, employees, customers, and suppliers, conflict with each other. In such cases, managers may face pressure to prioritize the interests of one stakeholder group over another, which can lead to decisions that are not in the best interest of the shareholders.

Question 20

Corporate takeovers have been promoted as a system of checks and balances for firm management.

Accepted Answer

Corporate takeovers enable external investors to acquire control of poorly performing firms and replace their management teams, thereby promoting accountability and better governance practices within the company. This is seen as a way to ensure that the interests of shareholders are protected and that executives are held accountable for their performance.

Quiz 5: Organization Mission Direction

Individuals or groups who are affected by or can influence an organization's operations are called