1. Adverse selection exists when the parties in an arrangement do not share equally in the risks and benefits.
True
False
2. 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).
True
False
3. Contracting out a firm’s non-core, non-revenue-producing activities to other organizations primarily to reduce costs is known as
outsourcing.
offshoring.
mass customization.
commoditization.
4. Corporate takeovers have been promoted as a system of checks and balances for firm management.
True
False
5. Creditors and suppliers typically share the same goals for the organization.
True
False
6. Discuss the two opposing perspectives on firm social responsibility.
7. Do boards of directors serve the interest of the shareholders? Explain.
8. Goals are verifiable and specific, and are developed so that management can measure performance.
True
False
9. Identify six common perspectives on managerial ethics. What is your perspective, and why?
10. Identify the two perspectives on the agency problem. Should this be a major concern in most U.S. firms? Why or why not.
11. Individuals or groups who are affected by or can influence an organization’s operations are called
shareholders.
stakeholders.
organizational constituencies.
None of the above.
12. Many companies limit the number of board memberships their own board members may hold.
True
False
13. Objectives are specific, often quantified, versions of goals.
True
False
14. Offshoring refers to relocating some or all of a firm’s manufacturing or other business processes to another country to reduce costs.
True
False
15. Outsourcing efforts can fail because
of hidden costs.
of loss of control of the outsourced activity.
a firm might outsource an activity that should not be outsourced.
All of the above.
16. Outsourcing refers to contracting out a firm’s non-core, non-revenue-producing activities to other organizations primarily to reduce costs.
True
False
17. Over the past several decades, the composition of the typical board has shifted from one controlled by insiders to one controlled by outsiders.
True
False
18. Relocating some or all of a firm’s manufacturing or other business processes to another country to reduce costs is known as
outsourcing.
offshoring.
mass customization.
commoditization.
19. Social responsibility and managerial ethics
are synonymous.
are related, but different concepts.
are relative easy to assess.
None of the above.
20. Social responsibility refers to an individual’s responsibility to make business decisions that are legal, honest, moral, and fair.
True
False
21. The CEO also serving as chair of the board is known as
rubber stamp mentality.
corporate governance.
CEO duality.
executive leadership.
22. The attractiveness of diversification is consistent with which agency perspective?
Management serves its own interests.
Management and stockholders share the same interests.
Management pursues the interests of the stakeholders.
None of the above.
23. The attractiveness of downsizing is consistent with which agency perspective?
Management serves its own interests.
Management and stockholders share the same interests.
Management pursues the interests of the stakeholders.
None of the above.
24. The competing priorities of an organization’s stakeholders are known as
the organization’s goals.
the mission.
the organization’s objectives.
None of the above.
25. The desired ends toward which efforts are directed comprise
the organization’s goals.
the mission.
the organization’s objectives.
None of the above.
26. The idea that business firms should serve both society and the financial interests of the shareholders is known as
the corporate charter.
the corporate dilemma.
managerial ethics.
None of the above.
27. The preoccupation with firm growth is consistent with which agency perspective?
Management serves its own interests.
Management and stockholders share the same interests.
Management pursues the interests of the stakeholders.
None of the above.
28. The triple bottom line refers to the notion that firms must maintain and improve social and ecological performance in addition to economic performance.
True
False
29. The utilitarian view of ethics suggests that anticipated outcomes and consequences should be the primary considerations when evaluating an ethical dilemma.
True
False
30. What is the difference between takeovers and leveraged buyouts? Are either good for U.S. firms or the economy?
31. When additional insiders are added to outsider-dominated boards, CEO dismissal is more likely when corporate performance declines.
True
False
32. When implemented properly, outsourcing can
cut costs.
refocus the core business.
improve firm performance.
All of the above.
33. When outsiders are added to insider-dominated boards,
CEO dismissal is less likely when performance is poor.
insiders are more likely to press for corporate restructuring.
insiders are likely to retain their relative influence on the management of the firm.
None of the above.
34. Which of the following might represent the goals of customers?
The company should provide high quality products and services at the most reasonable prices possible.
The company should maintain a healthy financial posture and a policy of on-time payment of debt
The company should produce a higher-than-average return on equity.
The company should provide goods and services with minimum environmental costs, increase employment opportunities, and contributing to social and charitable causes.
35. Which of the following might represent the goals of shareholders?
The company should provide high quality products and services at the most reasonable prices possible.
The company should maintain a healthy financial posture and a policy of on-time payment of debt.
The company should produce a higher-than-average return on equity.
The company should provide goods and services with minimum environmental costs, increase employment opportunities, and contributing to social and charitable causes.
36. Which view of ethics suggests that decisions should be based on existing norms of behavior, including cultural, community, or industry factors?
rights view
cultural view
religious view
None of the above.