STR 581 Final Exam

1. STR 581 Final Exam
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1) 3M, Hewlett-Packard, Lego, and other companies use the ________ to manage
the innovation process.
A. venture team
B. joint- venture system
C. stage-gate system
D. new product “team” E. skunk works
2) Total customer satisfaction is the general feeling of pleasure or disappointment
that results from comparing perceived performance to expectations. To achieve
total customer satisfaction, organizations need to_____________.
A. Lower expectations
B. Spend more money
C. Develop marketing campaigns
D. Manage customer experiences
E. Lower prices
3) A(n) ________ is any good, service, or idea that is perceived by someone as
new.
A. creative product
B. innovation
C. product
D. new idea
4) Most established companies focus on ________ when it comes to innovation.
A. incremental innovation
B. demand innovation

2. C. competitive innovation
D. continuous innovation
E. everyday innovation
5) A ________ is a set of procedures and sources managers use to obtain everyday
information about developments in the marketing environment.
A. marketing research system
B. marketing intelligence system
C. vertical system
D. marketing information system
E. product management system
6) A company can take several steps to improve the quality of its marketing
intelligence. If the company purchases competitive products for study, attends open
houses and trade shows, and reads competitors’ published reports and stockholder
information, the company is using ________ to improve the quality of its marketing
intelligence.
A. intermediaries
B. advisory panels
C. sales force surrogates
D. customer feedback systems
E. external networks
7) The value proposition consists of a cluster of benefits the company promises to
deliver; it is
A. customer experience with the company
B. customer expectations
C. Customer loyalty to the company
D. business processes
E. total customer satisfaction

3. 8) Particularly when shopping for ego-sensitive products such as perfumes and
expensive cars, many consumers use price as an indicator of ________.
A. capability
B. size
C. quality
D. ability
E. status
9) A firm has to consider many factors in setting its pricing policy. We list these as
a six-step process. Which of the following is NOT one of these steps?
A. Selecting the final price.
B. Selecting a pricing method.
C. Selecting the pricing objective.
D. Researching reference prices in the target market.
E. Determining demand.
10) The first step in estimating demand is to understand what affects price
sensitivity. Generally speaking, customers are most price sensitive to products that
cost a lot or are ________.
A. bought infrequently
B. bought frequently
C. priced low to begin with
D. low-cost
11) A marketing manager needs to know the cost of the research project before
approving it. During which step in the marketing research process would such a
consideration most likely take place?
A. Step 3—information collection
B. Step 2—develop the research plan.
C. Step 1—defining the problem.
D. Step 1—drafting the research objectives.

4. E. Step 1—creating decision alternatives.
12) Companies normally budget marketing research at ________ percent of
company sales.
A. 2 to 3
B. 10 to 12
C. 4
D. 1 to 2
E. 6.5
13) Which of the following types of marketing research firms would best be
described as one that gathers consumer and trade information which they sell for a
fee (e.g., Nielsen Media Research)?
A. Syndicated-service research firms
B. Non-profit marketing research firms
C. Specialty-line marketing research firms
D. Custom marketing research firms
E. General-line marketing research firms
14) The chief disadvantage to a firm that decides to follow a product specialization
strategy in selecting target markets is ________.
A. the product may be supplanted by an entirely new technology
B. no synergy exists
C. e-commerce becomes difficult for the company
D. logistics can become a nightmare
E. competitors can easily copy any new product introductions
15) Price has operated as the major determinant of buyer choice among poorer
nations, among poorer groups, and with ________ products.
A. similar
B. identical
C. commodity-type

5. D. over the Internet
16) A company can add new products through acquisition or development. The
acquisition route can take three forms. The company can buy other companies, it
can acquire patents from other companies, or it can buy a ________ or _________
from another company.
A. franchise/acquire rights
B. license/franchise
C. license/receive permission
D. franchise/co-brand
17) The marketing communications mix consists of six major modes of
communications. Which of the following is NOT one of these modes?
A. Advertising
B. Personal selling
C. Direct marketing
D. Sales promotions
E. Packaging
18) To reach Generation Y, rock band Foo Fighters created a digital street team
that sends targeted e-mail messages to members who “get the latest news,
exclusive audio/video sneak previews, tons of chances to win great Foo Fighters
prizes, and become part of the Foo Fighters Family.” Which of the following
techniques for reaching Generation Y are the Foo Fighters using?
A. Student ambassadors
B. Cool events
C. Online buzz
D. Computer games
E. Unconventional sports
19) “Power prices” use price as a key strategic tool. These “power prices” have
discovered the highly ________ effect of price on the botXXX XXne.
A. dramatic

6. B. leveraged
C. soothing
D. direct
E. abrasive
20) New-to-the- world products are ________.
A. new products that supplement established product lines (package sizes, flavors,
and so on)
B. new products that allow a company to enter an established market for the first
time
C. new products that create an entirely new market
D. existing products that are targeted to new markets or market segments
E. new products that provide improved performance or greater perceived value and
replace existing products
21) Marketing communications can contribute to brand equity by establishing the
brand in memory and to________ (in)a brand image.
A. communicate
B. create demand
C. create interest
D. craft
22) Following the ________ approach to target market selection encompasses a
strong knowledge of the segment’s needs, a strong market presence, and operating
economies through specializing in production, distribution, and promotion.
A. market specialization
B. product specialization
C. selective specialization
D. single-segment concentration
E. full market coverage
23) Major retailer types include the following EXCEPT ________.

7. A. the Internet
B. catalog showroom
C. discount store
D. specialty store
E. superstore
24) Which of the following is NOT included in the definition of conflict?
A. perception
B. negative effects
C. disruption of tasks
D. something that is cared about
E. incompatibility
25) The two general approaches to bargaining are known as ________.
A. emotional and rational.
B. formal and informal.
C. affective and reflective
D. distributive and integrative
E. legal and restrictive
26) _____ bargaining is negotiation that seeks to divide a “fixed pie.”
A. Integrative
B. Conjunctive
C. Reflective
D. Distributive
E. Affective
27) Which level of Maslow’s hierarchy of needs deals with satisfying one’s hunger,
thirst, and need for sex?
A. physiological

8. B. psychological
C. social
D. safety
E. esteem
28) John Kotter’s view argues that management focuses on coping with complexity,
whereas leadership focuses on coping with _____.
A. morale
B. change
C. defeat
D. success
E. conflict
29) Which of the following statements about leadership is true?
A. leaders are hierarchically superior to followers.
B. Nonsanctioned leadership is as important as or more important than formal
influence.
C. managers are leaders.
D. Formal rights enable managers to lead effectively.
E. leaders are managers.
30) Which of the following statements best defines a work group?
A. A work group is a group comprised of 10 or more people
B. The performance of a work group is generally greater than the sum of its inputs
from individual members.
C. A work group consists of 3 or more people who take on self-supervising
responsibilities.
D. A work group consists of 3 or more people from across departmental or
functional lines.
E. A work group interacts primarily to share information, rather than to engage in
work that requires joint effort.

9. 31) Which type of skill training has become increasingly important in organizations?
A. social
B. financial
C. problem solving
D. interpersonal
E. technical
32) _____ can be used to increase the perception that employees are treated fairly.
A. Focusing on subjective evaluations
B. Selective evaluation
C. Multiple raters
D. Documenting with a journal
E. Due process
33) According to a recent survey, about ___ percent of employees working in the
1,000 largest U.S. corporations receive ethics training.
A. 25
B. 10
C. 75
D. 50
34) Which of the following might a company consider when helping employees
address work-life conflicts?
A. reducing workloads
B. keeping work-related travel reasonable
C. relocation assistance
D. offering off-site quality child-care
E. tying manager pay to customer satisfaction
35) Training employees how to be better listeners falls under which of the following
training categories?

10. A. problem-solving skills
B. ethical skills
C. technical skills
D. interpersonal skills
E. cultural skills
36) Work specialization is the same as _____.
A. decentralization
B. departmentalization
C. division of labor
D. job grouping
E. chain command
37) The “realistic” personality from Holland’s typology of personality and congruent
occupations would be well suited for which of the following jobs?
A. biologist
B. accountant
C. lawyer
D. painter
E. mechanic
38) Whenever Jane is successful she takes full credit for what has happened, but
whenever she is unsuccessful she attributes her failure to bad luck or blames one of
her fellow employees. She is guilty of _____.
A. self-serving bias
B. attribution bias
C. distinctiveness
D. fundamental attribution error
E. the halo effect
39) A task that is subdivided into many separate jobs is considered to have _____.

11. A. a high degree of matrix structuring
B. a low degree of decentralization
C. a low degree of structure
D. a high degree of departmentalization
E. a high degree of work specialization
40) What term is used for the tendency of an individual to attribute his own
successes to internal factors while putting the blame for failures on external
factors?
A. fundamental attribution error
B. consistency
C. self-serving bias
D. stereotyping
E. selective perception
46) __________ says to recognize the value of hidden options in a situation, such
as the foreign exchange options in some derivative instruments.
A. The Time Value of Money Principle
B. The Principle of Two-Sided Transactions
C. The Options Principle
D. The Principle of Comparative Advantage
47) Which of the following statements is true?
A. The Principle of Capital Market Efficiency says to consider the possible ways to
minimize the value lost to capital market imperfections, such as asymmetric taxes,
asymmetric information, and transaction costs.
B. The Behavioral Principle suggests to look for opportunities to create value by
issuing securities that are in short supply, perhaps resulting from changes in tax
law.
C. The Signaling Principle says to consider any possible change in capital structure
carefully, because financing transactions and capital structure changes convey
information to outsiders and can be misunderstood.

12. D. all of these
48) Under capital rationing, a good tool to use is the __________.
A. IRR method
B. NPV method
C. payback method
D. PI method
49) Which of the following statements is true?
A. The Principle of Incremental Benefits says to consider the possible ways to
minimize the value lost to capital market imperfections, such as asymmetric taxes,
asymmetric information, and transaction costs.
B. The Principle of Valuable Ideas suggests to look for opportunities to create value
by issuing securities that are in short supply, perhaps resulting from changes in tax
law.
C. The Time Value of Money Principle advises to include any time-value-of-money
tax benefits from capital structure choices.
D. all of these
50) Which of the following statements is true?
A. The Principle of Incremental Benefits says to consider the possible ways to
minimize the value lost to capital market imperfections, such as asymmetric taxes,
asymmetric information, and transaction costs.
B. The Principle of Valuable Ideas suggests to look for opportunities to create value
by issuing securities that are in short supply, perhaps resulting from changes in tax
law.
C. The Time Value of Money Principle advises to include any time-value-of-money
tax benefits from capital structure choices.
D. all of these
51) Which of the following statements is true?
A. The Principle of Capital Market Efficiency says to consider the possible ways to
minimize the value lost to capital market imperfections, such as asymmetric taxes,
asymmetric information, and transaction costs.

13. B. The Behavioral Principle suggests to look for opportunities to create value by
issuing securities that are in short supply, perhaps resulting from changes in tax
law.
C. The Signaling Principle says to consider any possible change in capital structure
carefully, because financing transactions and capital structure changes convey
information to outsiders and can be misunderstood.
D. all of these
52) A checking account is __________.
A. a place to “collect” money between inflows and outflows
B. an account that acts like a reservoir
C. useful because you can add money in any amount
D. all of these
53) “Hard” capital rationing refers to the rationing __________.
A. imposed by external factors
B. always imposed by debt holders
C. imposed internally by the shareholders
D. always imposed by competitors
54) An all-equity-financed firm would __________.
A. not pay any income taxes because interest would exactly offset its taxable
income.
B. pay corporate income taxes if its taxable income is positive
C. pay corporate income taxes because it would have interest expense.
D. not pay corporate income taxes because it would have no interest expense.
55) Due to asymmetric information, the market fears that a firm issuing securities
will do so when the stock is _________.
A. overvalued
B. being sold by insiders
C. caught up in a bear market

14. D. undervalued
56) The conversion price (for a convertible security) is usually adjusted
__________.
A. for a new debt offering.
B. for stock splits.
C. for cash dividends.
D. all of these
57) __________ says that if you transfer risk to another party, you must offer a
return that fully compensates for the amount of risk transferred.
A. The Risk-Return Trade-Off Principle
B. The Principle of Self-Interested
C. The Principle of Incremental Benefits
D. The Behavioral Principle
58) According to the Principle of Risk-Return Trade-Off, investors require a higher
return to compensate for __________.
A. diversification
B. greater risk
C. less risk
D. lack of diversification
59) The financing decision best addresses which of the following questions?
A. Should we increase our inventory?
B. Should we buy this piece of land?
C. Should we issue common stock or convertible debt?
D. Should we give employees stock options?
60) A key variable covered in our text for the Black-Scholes OPM is __________.
A. dividends.
B. transaction costs.

15. C. EPS.
D. the riskless APR with continuous compounding
61) Which of these investments would you expect to have the highest rate of return
for the next 20 years?
A. intermediate-term U.S. government bonds
B. U.S. Treasury bills
C. long-term corporate bonds
D. anybody’s guess
62) You work for ABC, Inc. in the finance department. You own shares in ABC, Inc.
that are selling at $20 per share on the NYSE. You just found out they will have a
new stock offering. You just found out they will publicly announce a new stock
offering. The costs from the offering will be 10% of the new offering. The new
offering will increase the number of outstanding share by 30%. There are currently
20,000,000 shares of ABC outstanding. Once the announcement is made public,
what might be the expected impact from transaction (or issuance) costs on each
share you own?
A. You will lose 3% of the value of the share you own.
B. There will be no costs because markets are perfect when it comes to new stock
offerings.
C. You will lose 2% of the value of the shares you own.
D. There will be no costs because there is no information asymmetry present.
63) You do a study and find out that, on average, stock prices for firms decrease
3% for every 5% decrease in inside ownership. You are watching the nightly
business report and find out that Magic Tape’s stock has announced that insiders
have sold 10% of their holdings. You are concerned because you own 1,000 shares
of Magic Tape and it had closed the day before unchanged at $30 per share. If
markets are at least semi-strong form efficient, what would you expect?
A. You would lose $2.00 per share
B. You would expect Magic Tape to close at $28 the day of the announcement.
C. You would lose $1,800.
D. You would lose $4,000.

16. 64) Which of the following is not an advantage of going public?
A. Going public enables a firm to raise additional capital.
B. Going public gives existing shareholders a chance to sell portions of their shares
as part of the IPO giving them a cash return on their investment and allows them to
diversify their investment portfolios.
C. Going public generally brings a lower price in the public market than in the
venture capital or private placement markets.
D. Going public achieves liquidity and diversification for current shareholders
65) For what purpose is the theory of constraints used?
A. To reduce product defects.
B. To balance performance measurement.
C. To identify and manage constraints that bottle-neck operations.
D. To reduce inventory levels
66) A transfer price exists when two segments of the same organization sell _____.
A. a product to the same customer
B. a service to each other
C. a product in a foreign country
D. the same service to competitors
67) Baden Company manufactures a product with a unit variable cost of $50 and a
unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000
units were produced and sold. The company has a one-time opportunity to sell an
additional 1,000 units at $70 each in a foreign market which would not affect its
present sales. If the company has sufficient capacity to produce the additional
units, acceptance of the special order would affect net income as follows:
A. Income would increase by $70,000.
B. Income would increase by $4,000.
C. Income would increase by $20,000
D. Income would decrease by $4,000.

17. 68) Cena Corporation has a joint process that produces three products: P, G, and A.
Each product may be sold at split-off or processed further and then sold. Joint-
processing costs for a year amount to $25,000. Other relevant data are as follows:
Processing Sales Value Costs after Sales Value Product at Split-off Split-off at
Completion P $32,000 $5,000 $40,000 G 16,500 7,500 29,000 A 6,400 8,000
10,000 Once product P is produced, processing it further will cause profits to
_____.
A. decrease by $8,000
B. decrease by $5,000
C. increase by $3,000
D. increase by $8,000
69) Which one of the following managerial accounting approaches attempts to
allocate manufacturing overhead in a more meaningful fashion?
A. Total-quality management
B. Just-in-time inventory.
C. Theory of constraints.
D. Activity-based costing.
70) Which of the following does not appear as a separate section on the cash
budget?
A. Financing
B. Cash disbursements
C. Cash receipts
D. Capital expenditures
71) Efficiency is indicated by _____.
A. all of these answers are correct
B. static-budget variances
C. sales-activity variances
D. flexible-budget variances
72) Beginning cash balance plus total receipts

18. A. equals ending cash balance.
B. equals total available cash.
C. is the excess of available cash over disbursements.
D. must equal total disbursements.
73) _____ is an important factor considered by sales forecasters.
A. Past patterns of sales
B. General economic conditions
C. All of these answers are correct
D. Estimates made by the sales force
74) A company has total fixed costs of $120,000 and a contribution margin ratio of
20%. The total sales necessary to break even are
A. $600,000.
B. $144,000.
C. $150,000.
D. $480,000.
75) A cost which remains constant per unit at various levels of activity is a
A. fixed cost.
B. manufacturing cost.
C. mixed cost.
D. variable cost.
76) For an activity base to be useful in cost behavior analysis,
A. there should be a correlation between changes in the level of activity and
changes in costs.
B. the activity level should be constant over a period of time.
C. the activity should always be stated in terms of units.
D. the activity should always be stated in dollars.

19. 77) How much sales are required to earn a target net income of $128,000 if total
fixed costs are $160,000 and the contribution margin ratio is 40%?
A. $720,000.
B. $320,000.
C. $400,000.
D. $648,000.
78) Joint costs are incurred _____.
A. after the split-off point but before the process-further decision
B. after the process-further decision
C. before the production process is started
D. before individual products are separately identified
79) The first step in activity-based costing is to
A. assign manufacturing overhead costs for each activity cost pool to products.
B. compute the activity-based overhead rate per cost driver.
C. identify and classify the major activities involved in the manufacture of specific
products.
D. identify the cost driver that has a strong correlation to the activity cost pool.
80) _____ is/are a traditional way of allocating joint costs to products.
A. Indirect method
B. ABC method
C. Physical units
D. Direct method
81) There is no difference between variable-costing and absorption-costing income
if there is no_____.
A. beginning inventory
B. variable overhead cost
C. change in inventory level

20. D. ending inventory
82) Which of the following statements is incorrect with respect to creditors and
equity investors?
A. Both creditors and equity investors are concerned about security prices.
B. Equity investors are concerned about dividend payments.
C. Creditors are concerned with assessing the long term solvency of a company.
D. Creditors are concerned with assessing the short term liquidity of a company.
83) _____ are profitability ratios.
A. Gross profit rate and return on sales
B. Price earnings and current ratio
C. Earnings per share and dividend yield
D. Dividend payout and rate of return in invested capital
84) Which statements describe the principal reason(s) why investors and creditors
use financial statement analysis? 1. To assess the risks associated with expected
returns 2. To establish recommended dividend and interest payments 3. To
evaluate top and middle level management 4. To predict the amount of expected
returns
A. 1 and 4
B. 1 and 2
C. 3 and 4
D. 1, 2, and 3
85) _____ are sections of the balance sheet.
A. Assets, liabilities, and expenses
B. Revenues, assets, and liabilities
C. Expenses, revenues, and owners’ equity
D. Assets, liabilities, and owners’ equity

21. 86) Although the U.S. has had a longstanding agreement with ___________, after
the passage of NAFTA, _________ became the United States' second largest
trading partner.
A. Canada, Venezuela
B. Canada, Mexico
C. Mexico, Canada
D. Mexico, Venezuela
E. Great Britain, Paraguay
87) One study found that manufacturing labor costs about ___ an hour in China,
compared to ____ dollars in the United States.
A. $2; about 25
B. Less than $1; about 15
C. Less than $1; about 40
D. Less than $1; about 25
E. About $2; about 15
88) Which of the following is not one of the Caux Round Table Principles for
International Business?
A. Respect for the Environment.
B. Avoidance of Illicit Operations.
C. Responsibility of Business Beyond Shareholders Toward Stakeholders.
D. Promotion of Multiculturalism.
E. Support for Multilateral Trade.
89) Which social responsibility theory has been advocated by Novel Prizewinning
economist Milton Friedman?
A. Corporate social audit
B. Moral minimum
C. Maximizing profits
D. Corporate citizenship

22. E. Stakeholder interest
90) Diversity training programs are generally intended to provide a vehicle for
_____.
A. socializing otherwise unmanageable employees
B. focusing on individual differences
C. increasing awareness and examining stereotypes
D. balancing work/life conflicts
E. eliminating group learning
91) Which article of the United States Constitution deals with the judicial power of
the federal government?
A. Article II.
B. Article III.
C. Article IV.
D. Article V.
E. Article I.
92) Which of the following statements is generally not true about state intermediate
appellate courts?
A. The appellate court usually allows the parties to file briefs outlining support for
their positions.
B. The appellate court allows the parties to make oral arguments outlining their
position.
C. The appellate court allows the parties to introduce new evidence so long as it
was not previously introduced at the original trial.
D. Appellate court decisions are final and further appeal is not possible.
E. The appellate court reviews the record of the trial court.
93) When movie ticket prices increase, families tend to spend less time watching
movies and more time at home watching videos instead. This best reflects:
A. diminishing marginal utility.

23. B. the rationing function of markets.
C. the substitution effect.
D. the income effect.
94) When an economist says that the demand for a product has increased, this
means that:
A. consumers respond to a lower price by buying more.
B. firms make less of the product available for sale.
C. quantity demanded is greater at each possible price.
D. the demand curve becomes steeper.
95) The force behind globalization in _____ was the amount of muscle, horsepower,
wind power, or steam power that a country could deploy.
A. Globalization 3.0
B. Globalization 2.0
C. Globalization 1.0
D. None of these
96) The costs of delivering products in the _____ channel are much higher than
delivering products in the _____ channel.
A. digital, physical
B. digital, e-commerce
C. e-commerce, digital
D. physical, financial
E. physical, digital
97) Which of the following is NOT a function of functional area information systems?
A. provides analysis capabilities to middle level managers and staff
B. provides information mainly in the form of reports
C. supports the managerial tasks of planning, organizing, and controlling operations
D. provides information to managers in the functional areas

24. E. provides data from business events to the corporate database
98) A _____ scale is a scale that scores an object or property without making a
direct comparison to another object or property.
A. Recording
B. Categorization
C. Rating
D. Ranking
E. Sorting
99) The use of a(n) _____ serves as a comparison to assess the existence and
potency of the manipulation.
A. Field experiment
B. Criterion variable
C. Control group
D. Experimental group
E. Explanatory variable
100) Marketing research is now about a ________ billion industry globally.
A. $50
B. $10
C. $7.5
D. $16.5
E. $21.5