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Business and Its Environment, 7e David P. Baron
(Test Bank all Chapters)
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Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
1
Chapter One:
Market and Nonmarket Environments
True/False Questions:
1) Firms have more control over their future in their nonmarket environment than they have in the markets in which they operate.
Answer: False
Page reference: 1
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
2) The long-run sustainability of competitive advantage requires managing effectively in the nonmarket environment.
Answer: True
Page reference: 1
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
3) Effective management in the market environment is sufficient for superior performance of the firm over its competitors.
Answer: False
Page reference: 2
Difficulty: Moderate
AACSB:
Learning Outcome: Describe the components of the management environment
4) 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.
Answer: True
Page reference: 2
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
5) 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.
Answer: True
Page reference: 2
Difficulty: Moderate
AACSB: 2 / 4
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
2
Learning Outcome: Describe the components of the management environment
6) 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: True
Page reference: 2
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
7) Managers do not participate in the implementation of nonmarket strategies.
Answer: False
Page reference: 3
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
8) In formulating nonmarket strategies, managers may draw on the expertise of lawyers, communications specialists, Washington representatives, and community relations specialists.
Answer: True
Page reference: 3
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
9) In the nonmarket environment, legislation, regulation, administrative decisions, and public pressure are the result of competition involving individuals, activists, interest groups, and firms.
Answer: True
Page reference: 4
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
10) In the market environment, strategies are intermediated by public and private institutions, whereas in the nonmarket environment, strategies are intermediated by markets.
Answer: False
Page reference: 4
Difficulty: Moderate
AACSB:
Learning Outcome: Describe the components of the management environment
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Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
3 11) The nonmarket environment of a firm is characterized by four I’s: independence, individuality, ideas and income.
Answer: False
Page reference: 4
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
12) Information is the basic unit of analysis and the focus of nonmarket action.
Answer: False
Page reference: 4
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
13) 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.
Answer: True
Page reference: 4
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
14) Institutions include only principal government institutions and cannot be established by private parties.
Answer: False
Page reference: 9-10
Difficulty: Moderate
AACSB:
Learning Outcome: Describe the components of the management environment
15) Institutions are not unitary bodies.
Answer: True
Page reference: 10
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
16) All institutions represent a set of countries.
Answer: False
Page reference: 10
Difficulty: Easy
AACSB:
Learning Outcome: Describe the components of the management environment
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