Question 1

In a SWOT analysis the strengths and weaknesses come from the internal environment (e.g., financial, operations, marketing, and human resources).

Accepted Answer

Strengths and weaknesses are internal factors that come from within the organization's operations, management, processes, and resources. The SWOT analysis helps organizations to identify and analyze their internal strengths and weaknesses, as well as external opportunities and threats.

Question 2

Providing value means that a business must constantly strive to lower the price of its products and services.

Accepted Answer

Providing value does not necessarily mean lowering the price. It can also mean improving the quality or features of the product/service to make it more desirable to the customer. It can also mean providing exceptional customer service or convenience.

Question 3

The mission statement is used to differentiate an organization from its competition and further refines the direction articulated in the vision statement, answering questions such as, "Who are we?" and "What businesses are we in?"

Accepted Answer

The statement accurately describes the purpose and function of a mission statement. It defines an organization's identity and helps to set it apart from similar businesses or groups.

Question 4

A sustainable competitive advantage is a competitive advantage that a company can continue to exploit over time as it is not easily duplicated.

Accepted Answer

A sustainable competitive advantage is a unique advantage that a company possesses which cannot be easily replicated or imitated by its competitors. This factor helps the company to stay ahead in the market and generate higher profits for a longer period of time.

Question 5

Revenue, expenses, and net income are the key sections found on a statement of cash flows.

Accepted Answer

Revenue, expenses, and net income are key sections found on an income statement, not a statement of cash flows. The sections typically found on a statement of cash flows include operating cash flows, investing cash flows, and financing cash flows.

Question 6

Stakeholders are affected by the decisions that the business makes, and therefore the business has a responsibility to consider them in those decisions.

Accepted Answer

Stakeholders include customers, employees, shareholders, suppliers, local communities, and government agencies. Any decision made by a business can have an impact on these groups, and therefore it is the responsibility of the business to consider their needs and interests. This concept is known as corporate social responsibility (CSR), and it is increasingly important for businesses to demonstrate that they are making ethical and sustainable decisions that benefit society as a whole.

Question 7

A distinctive competence is a unique core competence, something that a company can do better than the competition.

Accepted Answer

A distinctive competence is a unique strength or capability that sets a company apart from its competitors, giving it a competitive advantage. It is a type of core competence that is not easily imitated or replicated by competitors.

Question 8

An income statement is the financial statement that reports revenues, expenses, and profit or loss resulting from a company's operations over an accounting period.

Accepted Answer

An income statement is indeed the financial statement that reports revenues, expenses, and profit or loss resulting from a company's operations over an accounting period.

Question 9

SWOT stands for strengths, weaknesses, opponents, and threats.

Accepted Answer

SWOT stands for strengths, weaknesses, opportunities, and threats.

Question 10

The five stages of industry evolution are evolution, growth, shakeout, mature, and declining industry environment.

Accepted Answer

The five stages of industry evolution are introduction, growth, shakeout, maturity, and decline.

Question 11

A vision statement outlines why the company exists and where it's going in the future. It clearly states the goals and objectives of the company and helps decision makers plan for future actions.

Accepted Answer

A vision statement is meant to provide a clear direction and purpose for a company, outlining its goals and objectives for the future. This can guide decision making and help ensure that all actions taken by the company are aligned with its overall vision.

Question 12

A core competence is something that a company does well internally.

Accepted Answer

The answer of A core competence is something that a...

Question 13

An organization's mission statement is usually a complex document that provides a detailed description of the principles that guide the organization and the way those principles should be applied to its major business initiatives.

Accepted Answer

An organization's mission statement is typically a concise statement that defines the organization's core purpose, aims, and values, not a detailed document describing principles and their application.

Question 14

Yvon Chouinard, Patagonia founder, believes in making the best products to inspire and implement solutions to the environmental crisis. He hires employees who appreciate the outdoors and share his vision. This is an example of building a business with employees who are motivated to support the company's mission.

Accepted Answer

The statement accurately describes Yvon Chouinard's approach to building a business with employees who share his vision and are motivated to support the company's mission.

Question 15

Pro forma statements are idealized financial statements that show the company's average financial performance over the past 10 years.

Accepted Answer

Pro forma statements are not based on past performance, but rather on projections or hypothetical scenarios. They are created to illustrate how a company's financials would look under certain conditions, such as after a merger or acquisition, or if a new product line were introduced.

Question 16

Porter's five forces model focuses on the five forces that shape competition within an industry.

Accepted Answer

Porter's five forces model examines the competitive forces within an industry, including the bargaining power of buyers and suppliers, threat of new entrants, rivalry among existing competitors, and threat of substitutes.

Question 17

The statement of cash flows shows the cash flowing into and out of a company.

Accepted Answer

The statement of cash flows provides information on the cash inflows and outflows of a company during a specific period, categorized into operating, investing, and financing activities. It helps stakeholders assess a company's ability to generate cash, meet its financial obligations, and invest in future growth opportunities.

Question 18

Pro forma income statements forecast the assets a company will need in the next accounting period.

Accepted Answer

Pro forma income statements forecast the expected revenues, expenses, and profits of a company for a future period. They do not provide information about the assets that a company will need. Pro forma balance sheets, on the other hand, provide information about a company's assets, liabilities, and equity for a future period.

Question 19

The industry life cycle model analyzes the effects of an industry's evolution on competitive forces.

Accepted Answer

The industry life cycle model indeed examines how a particular industry's growth and maturity stage affects competitive forces. It provides insights into the shifting dynamics of the industry, the changes in customer needs or preferences, and the challenges and opportunities for businesses in various stages of growth. Understanding the industry life cycle can help firms make more informed strategic decisions and adapt to changes in the market environment.

Question 20

The three most critical and obvious stakeholder groups are the owners of the business (or shareholders in the case of a corporation), the employees of the business (and their union if represented by one), and the customers.

Accepted Answer

These are indeed the three most critical and obvious stakeholder groups in any business.

Quiz 7: Understanding the Business