CHAPTER 5 5-1. The corporat

CHAPTER 5

5-1. The corporation is the most common form of business ownership.

Answer: False LG: 1/LL: 1 Page: 142

5-2. The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations.

Answer: True LG: 1/LL: 1 Page: 142

5-4. Once a business is established, it’s almost impossible to change from one form of business ownership to another.

Answer: False LG: 1/LL: 1 Page: 142

5-5. A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

Answer: False LG: 1/LL: 1 Page: 143

5-6. The first step in starting a sole proprietorship is to fill out a proprietorship charter application form and file it with the state government.

Answer: False LG: 1/LL: 1 Page: 143

5-8. The profits of a sole proprietorship are taxed as the personal income of the owner.

Answer: True LG: 1/LL: 1 Page: 143
5-10. A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

Answer: False LG: 1/LL: 1 Page: 143

5-12. The debts of a business operated as a sole proprietorship are considered to be the personal debts of the owner of the business.

Answer: True LG: 1/LL: 1 Page: 143-144

5-13. A drawback of sole proprietorships is that they usually have limited access to additional financial resources.

Answer: True LG: 1/LL: 1 Page: 144

5-14. An advantage of forming a sole proprietorship is that it allows the owner to have more time for leisure activities.

Answer: False LG: 1/LL: 1 Page: 144

5-15. Jim wants to start a business. He is attracted by the idea of being his own boss, and wants to get started with a minimum of expense and hassle. He is very confident in his abilities, so he is not particularly worried about financial risks. All of these factors suggest that Jim would favor starting his business as a sole proprietorship.

Answer: True LG: 1/LL: 2 Page: 143

Rationale: People who want to be their own boss often prefer to operate their business, at least initially, as a sole proprietorship. Another advantage of the sole proprietorship is that it is a relatively easy and inexpensive form of business to set up. One drawback of a sole proprietorship is that the owner has unlimited liability. However, Jim is not worried about risk, so this would not appear to be a major problem for him.

5-16. If a sole proprietorship fails, the owner may lose whatever was invested in the business, but the owner’s personal assets are not at risk.

Answer: False LG: 1/LL: 2 Page: 143-144

Rationale: Sole proprietors have unlimited liability for the debts of their business. This means that if their business gets into financial trouble they can lose their personal assets.

5-19. A general partner can take an active role in the management of the business.

Answer: True LG: 2/LL: 1 Page: 145

5-20. All of the partners in a general partnership have limited liability for the debts of their firm.

Answer: False LG: 2/LL: 1 Page: 145

5-21. In a general partnership, all owners share in both management of the business and in the assumption of liability for the firm’s debts.

Answer: True LG: 2/LL: 1 Page: 145
5-24. A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

Answer: True LG: 2/LL: 1 Page: 145
5-27. According to the Uniform Partnership Act, the three key elements of any general partnership are (1) shares of stock to represent ownership, (2) limited liability, and (3) ease of ownership transfer.

Answer: False LG: 2/LL: 1 Page: 145

5-28. A recent study showed that partnerships are more likely to fail than sole proprietorships.

Answer: False LG: 2/LL: 1 Page: 146

5-29. A major objective of limited liability partnerships (LLPs) is to limit each partner’s personal liability to the consequences of their own acts and those of people under their supervision.

Answer: True LG: 2/LL: 1 Page: 145

5-32. In order to protect all parties and minimize misunderstandings among partners, all terms of the partnership should be spelled out in writing.

Answer: True LG: 2/LL: 1 Page: 147

5-33. One advantage of a partnership is that there is a simple process for partners to terminate their business.

Answer: False LG: 2/LL: 1 Page: 147

5-34. Compared to sole proprietorships, an advantage of partnerships is their ability to obtain more financial resources.

Answer: True LG: 2/LL: 1 Page: 145

5-36. Compared to sole proprietorships, partnerships offer the advantage of shared management and pooled knowledge.

Answer: True LG: 2/LL: 1 Page: 145-146

5-37. A limited partnership refers to a partnership set up for a temporary purpose, such as a real estate development project.

Answer: False LG: 2/LL: 1 Page: 145

5-38. Ted and Mark have been partners in a dry cleaning business for the past three years. They would like their brother Todd to join them. Unfortunately, partnership law states that only two partners can participate in a partnership.

Answer: False LG: 2/LL: 2 Page: 145

Rationale: A partnership consists of two or more owners.

5-40. Sharon Pebble and Gilbert Stone have just formed a business partnership. Under their arrangement, Sharon will actively manage the company and assume unlimited liability for the firm’s debts. Gilbert will invest several thousand dollars of his money and will share in the profits, but will not actively manage the firm and will not have liability for losses beyond his initial investment. Sharon and Gilbert have formed a limited partnership.

Answer: True LG: 2/LL: 2 Page: 145

Rationale: A limited partnership consists of at least one general partner, who has unlimited liability, and at least one limited partner, who can lose only what he or she has invested. The limited partner cannot actively manage the partnership.

5-41. Alphonzo has agreed to become a partner in his brother’s new clothing store and has provided 30 percent of the startup capital for Remora’s Clothiers. Since he provided 30 percent of the money to start the firm, he is legally entitled to 30 percent of any the profits the firm earns during its first year of operations.

Answer: False LG: 2/LL: 2 Page: 146-147

Rationale: The division of profits in a partnership is negotiable and is not necessarily tied to the amount of the initial investment.

5-42. Ron and Jon want to go into business together. They do not want to bring in other partners, but they both want to avoid unlimited liability for any debts incurred by their new company. Ron and Jon can achieve their aims by organizing the firm as a limited partnership.

Answer: False LG: 2/LL: 2 Page: 145

Rationale: All partnerships, including limited partnerships, must include at least one general partner. The general partners in a limited partnership must accept unlimited liability. Thus, if Ron and Jon form a limited partnership they will either have to bring in another person to be the general partner, or one of them will have to be the general partner and accept unlimited liability.

5-44. Connie is a general partner in a retail cookie store. Her personal assets are protected from the debts of the business.

Answer: False LG: 2/LL: 2 Page: 145

Rationale: As a general partner, Connie assumes unlimited liability for the debts of her business.

5-45. A conventional corporation is a state-chartered legal entity, with authority to act and have liability separate from its owners.

Answer: True LG: 3/LL: 1 Page: 149
5-48. A corporation can raise financial capital by selling shares of stock to interested investors.

Answer: True LG: 3/LL: 1 Page: 150

5-49. Stockholders in a corporation must accept unlimited liability for the corporation’s debts.

Answer: False LG: 3/LL: 1 Page: 149

5-51. When one of the owners of a corporation dies, the corporation legally ceases to exist.

Answer: False LG: 3/LL: 1 Page: 150

5-52. Corporations are easy to start and easy to terminate.

Answer: False LG: 3/LL: 1 Page: 151

5-53. A disadvantage of corporations is that they generally require extensive paperwork.

Answer: True LG: 3/LL: 1 Page: 151

5-56. The stockholders in a corporation elect a board of directors to oversee the company’s major policy issues.

Answer: True LG: 3/LL: 1 Page: 150-151

5-57. Stockholders in a corporation have limited liability for the debts of the corporation.

Answer: True LG: 3/LL: 1 Page: 149

5-58. One advantage of corporations is that the initial cost of setting them up is usually lower than for other forms of ownership.

Answer: False LG: 3/LL: 1 Page: 151

5-61. One reason Individuals incorporate is to obtain the advantage of limited liability.

Answer: True LG: 3/LL: 1 Page: 152

5-62. One advantage of an S Corporation is that the profits of the business are taxed as regular personal income of the owners, thus avoiding the problem of double taxation.

Answer: True LG: 3/LL: 1 Page: 152-153
5-63. Any corporation can qualify to be classified as an S corporation as long as it fills out and files the proper paperwork with the appropriate state agency on an annual basis.

Answer: False LG: 3/LL: 1 Page: 153

5-65. The advantages of limited liability companies are not available to providers of personal services like doctors and lawyers.

Answer: False LG: 3/LL: 1 Page: 153

5-68. A limited liability company is similar to an S corporation, but without the special eligibility requirements.

Answer: True LG: 3/LL: 1 Page: 153

5-69. Limited liability companies have both flexibility in tax treatment of earnings and limited liability protection for owners.

Answer: True LG: 3/LL: 1 Page: 153

5-71. Like stockholders of a C corporation, owners of a limited liability company (LLC) are free to sell their ownership without the approval of other members.

Answer: False LG: 3/LL 1 Page: 154

5-72. Owners of limited liability companies (LLCs) must pay self-employment taxes on any profits they earn.

Answer: True LG: 3/LL: 1 Page: 154

5-74. Dr. Wright is interested in incorporating as an individual. While this is legally possible, there are really no advantages to doing so.

Answer: False LG: 3/LL: 2 Page: 152

Rationale: Many individuals choose to incorporate to obtain limited liability. In some cases, they may also receive tax savings by doing so.

5-75. Nutty Dough is a small chain of donut shops that is currently owned and operated by a group of seven partners. The owners think that their chain has the potential for rapid growth, but several of the partners are concerned about the growing financial risks that will accompany this growth. One way the partners could deal with this problem would be to incorporate their business.

Answer: True LG: 3/LL: 2 Page: 150

Rationale: Because they can issue shares of stock and bonds, and often find it easier to obtain loans from financial institutions, corporations usually have easier access to financial resources than unincorporated businesses. Another advantage of corporations is that they provide their owners (stockholders) with the protection of limited liability.

5-76. When Erica Wayne decided to start a business she chose to form it as a corporation. This choice ensures that, as the founder and incorporator of the company, Erica will remain in control of the firm’s operations as long as she wants, no matter how large or complex the business becomes.

Answer: False LG: 3/LL: 2 Page: 151

Rationale: One potential drawback of incorporation is the possibility of conflict between the entrepreneurs who originally start a business and the stockholders and board of directors who may eventually gain control. The text cites the cases of Rod Canion of Compaq and Steve Jobs of Apple Computer as examples of entrepreneurs who were forced out of the very companies they founded.

5-77. Mojo Motors is a rather small conventional corporation with only 212 stockholders. Eleven of the stockholders are citizens of Mexico who live in Mexico City, and eight more are citizens of Canada who live in Toronto. Mojo Motors should organize as an S corporation in order to save on taxes.

Answer: False LG: 3/LL: 2 Page: 153

Rationale: Mojo Motors does not satisfy the requirements for an S corporation–it has more than 75 stockholders, some of whom are not U.S. citizens or permanent residents of the United States.

5-78. The partners at Edgar’s Microbrewery would like to switch to an S corporation. Unfortunately, their lawyer has told them that they do not meet some of the requirements necessary to qualify as an S corporation. An alternative form of business that would give them similar advantages is a limited liability company.

Answer: True LG: 3/LL: 2 Page: 153

Rationale: Limited liability companies offer many of the same advantages as S corporations, including limited liability and the possibility of taxation like a partnership, without the special eligibility requirements required to qualify for S corporation status.

5-79. The owners of the new Chillout Ice Cream Company have chosen to organize their business as a limited liability company. One drawback of this form of ownership is that the owners will pay higher taxes on their earnings than a regular corporation if their company grows rapidly.

Answer: False LG: 3/LL: 2 Page: 153

Rationale: In terms of taxes, a limited liability company offers the best of all worlds, allowing the owners to choose to be taxed as a partnership or a corporation depending on which tax rates would benefit them the most.
5-81. In a merger, two firms combine to form one company.

Answer: True LG: 4/LL: 1 Page: 156

5-83. An acquisition is when one company buys the property and obligations of another company.

Answer: True LG: 4/LL: 1 Page: 156

5-86. In a conglomerate merger, firms in the same industry merge to expand their share of the market.

Answer: False LG: 4/LL: 1 Page: 157

5-88. A merger between two businesses in different stages of related businesses is known as a vertical merger.

Answer: True LG: 4/LL: 1 Page: 156

5-91. When a group of investors take a firm private, they obtain all of the stock for themselves.

Answer: True LG: 4/LL: 1 Page: 157

5-94. In the past, the Beirderg’s Markets and Bronew’s Groceries have been fierce competitors in the grocery market. However, they recently issued a joint announcement stating their decision to merge. The announcement justified the proposed merger by claiming that the resulting firm would have more financial resources, which would enable it to expand services and broaden offerings to consumers. This proposed merger is an example of a horizontal merger.

Answer: True LG: 4/LL: 2 Page: 157

Rationale: A merger between two firms in the same industry, such as two grocery store chains, is a horizontal merger.

5-96. A major objective of a leveraged buyout is to enable investors to gain control of a company by issuing new shares of ownership, thus minimizing the use of debt.

Answer: False LG: 4/LL: 2 Page: 157

Rationale: Leveraged buyouts involve financing the acquisition of an organization through the use of debt financing.

5-97. Jane Gramm is leading a group of stockholders who want to take the Bigbux Corporation private. If Jane’s group succeeds, Bigbux’s stock will no longer be available to investors on the open market.

Answer: True LG: 4/LL: 2 Page: 157

Rationale: Taking a firm private involves gaining control of a firm’s stock so that it is no longer available to investors on the open market.

5-98. The workers at Scrappy’s Metal Fabrication, Inc., have learned that the firm is about to close down. They have devised a plan to use debt financing to buy the company’s stock from current shareholders with the intention of keeping the company in business, thus saving their jobs. This strategy is called a leveraged buyout.

Answer: True LG: 4/LL: 2 Page: 157

Rationale: A leveraged buyout involves the use of debt financing to buy the stock of a company. This is what the workers are attempting to do in this example.

5-100. A franchise agreement is an arrangement where a franchisor sells the rights to a business name and to sell a product or service within a given territory to a franchisee.

Answer: True LG: 5/LL: 1 Page: 158

5-101. A franchise may be organized as a sole proprietorship, partnership, or corporation.

Answer: True LG: 5/LL: 1 Page: 158

5-105. In a franchise arrangement, ownership of all of the individual stores or outlets remains in the hands of the franchisor.

Answer: False LG: 5/LL: 1 Page: 159

5-106. One of the major advantages of a franchise system is the franchisee often gets instant recognition from consumers.

Answer: True LG: 5/LL: 1 Page: 159

5-107. Franchisees must follow more rules, regulations, and procedures than if they operated independently owned businesses.

Answer: True LG: 5/LL: 1 Page: 160

5-108. The “coattail effect” refers to the burden of corporate rules and regulations on franchisees.

Answer: False LG: 5/LL: 1 Page: 160

5-111. The franchisee often must pay the franchisor a share of profits or a percentage commission on sales known as a royalty.

Answer: True LG: 5/LL: 1 Page: 160
5-116. Franchising in global markets has demonstrated that high operating costs are counterbalanced by high profit opportunities.

Answer: True LG: 5/LL: 1 Page: 164

5-121. Les is a franchisee in the Far Horizons Travel Agency franchise. As a franchisee, Les is guaranteed the right to retain all of his franchise’s profits.

Answer: False LG: 5/LL: 2 Page: 160

Rationale: Franchisees usually pay a royalty to the franchisor. This royalty is sometimes expressed as a share of the franchisee’s profits.

5-122. Leanne is a franchisee in a restaurant chain. Thanks mainly to her hard work and people skills, her individual outlet is doing quite well. However, she has noticed that several other franchisees in the same chain have let their businesses deteriorate, especially in terms of the quality of the food they offer. Leanne should be very concerned about this trend, since it eventually could affect her own business.

Answer: True LG: 5/LL: 2 Page: 160

Rationale: The actions of less successful franchisees can hurt the success of others in the same franchise. This is known as the coattail effect.

5-125. A cooperative consists of people with similar needs who pool their resources for mutual gain.

Answer: True LG: 6/LL: 1 Page: 165

5-126. It is not unusual for members of cooperatives to work for and help manage their cooperative.

Answer: True LG: 6/LL: 1 Page: 165

5-127. Farm cooperatives were originally established to help farmers increase their economic power by acting as a group rather than as individuals.

Answer: True LG: 6/LL: 1 Page: 165

5-133. The ___________ is the most common form of business ownership.
A) partnership.
B) corporation.
C) joint venture.
D) sole proprietorship.

Answer: D LG: 1/LL: 1 Page: 142
5-134. A ___________ is a business organization that is owned, and usually managed, by one person.
A) closed corporation.
B) subchapter S corporation.
C) sole proprietorship.
D) limited partnership.

Answer: C LG: 1/LL: 1 Page: 142

5-135. ____________ comprise about 20% of all businesses but account for about 87% of all business receipts.
A) Corporations
B) Partnerships
C) Sole proprietorships
D) Limited liability companies

Answer: A LG: 1/LL: 1 Page: 142

5-142. Any debts or damages incurred by a firm organized as a sole proprietorship are:
A) the sole responsibility of the owner.
B) limited to the amount the owner has invested in the firm.
C) paid for out of a reserve contingency fund that sole proprietors are required by law to set up.
D) normally covered by liability insurance.

Answer: A LG: 1/LL: 1 Page: 143-144

5-143. An entrepreneur who wishes to start a business with little delay or hassle, and who wants to be his or her own boss, should organize the business as a:
A) sole proprietorship.
B) cooperative.
C) C corporation.
D) general partnership.

Answer: A LG: 1/LL: 2 Page: 143

Rationale: Two advantages of sole proprietorships are ease of starting (and ending) and being your own boss.
CHAPTER 6

TRUE/FALSE

6-1. Entrepreneurship involves accepting the risk of starting and running a business.

Answer: True LG: 1/LL: 1 Page: 174
6-2. Entrepreneurship is another name for management.

Answer: False LG: 1/LL: 1 Page: 174

6-3. Many business started by entrepreneurs have grown into major corporations employing thousands of workers.

Answer: True LG: 1/LL: 1 Page: 174 -175

6-4. Entrepreneurs are motivated by the desire to earn a profit.

Answer: True LG: 1/LL: 1 Page: 176

6-5. Successful entrepreneurs accept the risk of failure.

Answer: True LG: 1/LL: 1 Page: 176

6-6. It is important for an entrepreneur to be highly energetic.

Answer: True LG: 1/LL: 1 Page: 176

6-7. Potential entrepreneurs would be well advised to surround themselves with people who are smarter than they are.

Answer: True LG: 1/LL: 1 Page: 177, Figure 6.1

6-8. Entrepreneurial teams combine the creative marketing and production ideas of a group of experienced people. .

Answer: True LG: 1/LL: 1 Page: 177

6-9. Micropreneurs is a term used to describe entrepreneurs who focus on the continued growth of their businesses.

Answer: False LG: 1/LL: 1 Page: 178

6-10. The most important difference between entrepreneurs and micropreneurs is the focus placed by micropreneurs on balancing the demands of work and family.

Answer: True LG: 1/LL: 1 Page: 178

6-11. Micropreneurs are motivated by a desire to have both a satisfying family life and rewarding work.

Answer: True LG: 1/LL: 1 Page: 178

6-12. Web-based businesses avoid the risk of failure faced by traditional startup businesses.

Answer: False LG: 1/LL: 1 Page: 181

6-13. An intrapreneur is the creative person who starts and manages a nonprofit organization.

Answer: False LG: 1/LL: 1 Page: 181

6-14. Creative people working as entrepreneurs within a large organization are called intrapreneurs.

Answer: True LG: 1/LL: 1 Page: 181

6-15. The U.S. government offers “investor visas” to attract more entrepreneurs.

Answer: True LG: 1/LL: 1 Page: 183

6-16. Enterprise zones offer lower tax rates and government assistance to attract private business investment.

Answer: True LG: 1/LL: 1 Page: 183

6-17. Entrepreneurial teams increase the cooperation between marketing, production and other functional areas of a business venture

Answer: True LG: 1/LL: 2 Page: 177

Rationale: In entrepreneurial teams, all members work together to conceive, make, and market a new product.

6-18. Kylie is employed by Street Wheels, a large corporation that produces accessories for scooters, bicycles, and other children’s vehicles. She is a creative force within the company and has helped launch several new successful products. Kylie is an example of an intrapreneur.

Answer: True LG: 1/LL: 2 Page: 181

Rationale: Intrapreneurs are creative people who work within corporations to launch new products and generate new profits.

6-19.
The management of a nonprofit organization is much the same as the management of small and large businesses.

Answer: True LG: 2/LL: 1 Page: 184

6-20. Of all nonfarm businesses in the United States, almost 97 percent are considered small by the Small Business Administration (SBA) standards.

Answer: True LG: 2/LL: 1 Page: 184

6-21. Large firms have a greater ability to provide personalized, fast response customer service than do small business organizations.

Answer: False LG: 2/LL: 1 Page: 185

6-22. About 80 % of Americans find their first jobs in small businesses.

Answer: True LG: 2/LL: 1 Page: 184

6-23. The number of women owning small businesses has grown slowly.

Answer: False LG: 2/LL: 1 Page: 184

6-24. Many small businesses list the lack of qualified workers as one of their biggest obstacles to growth.

Answer: True LG: 2/LL: 1 Page: 184

6-25. Most business opportunities offer entrepreneurs high levels of security and profits.

Answer: False LG: 2/LL: 1 Page: 186

6-26. The easiest businesses to start also have the least growth potential and the greatest failure rates.

Answer: True LG: 2/LL: 1 Page: 186

6-27. While the first job for many people is working for a small business, most of the permanent new jobs are created by larger corporations.

Answer: False LG: 2/LL: 2 Page: 184

Rationale: Employment in large companies has been declining for many years. Virtually all job growth is provided by small businesses.
6-28. Marina has just completed her business degree. Her best job search strategy would be to concentrate on looking for work with a major corporation.

Answer: False LG: 2/LL: 2 Page: 184

Rationale: Many large firms are downsizing, and virtually all job growth is currently created by small businesses. If Maria focuses on job opportunities with big firms, she is likely to limit her chances of finding employment.

6-29. Renee, a manager at a small manufacturing firm, has offered to help manage a local branch of the YMCA. Unfortunately, Renee will find that the skills acquired managing a small business will not be useful in managing a nonprofit organization.

Answer: False LG: 2/LL: 2 Page: 184

Rationale: The skills needed to manage small businesses, big businesses, charities, churches, and government agencies are very similar.

6-30. A close look at the statistics indicates that the lack of qualified workers is a major obstacle to the growth of successful small businesses.

Answer: True LG: 2/LL: 2 Page: 184

Rationale: One quarter of the small businesses surveyed list the lack of qualified workers as one of their biggest obstacles to growth.

6-31. Traditionally small business statistics classified the retirement of an owner of a sole proprietorship as a business failure.

Answer: True LG: 2/LL: 2 Page: 185

Rationale: Retirement and change of the legal form of business (i.e. partnership to a corporation) have traditionally been classified as a business failure. Economist Bruce Kirchhoff contends that these misinterpretations of the statistics have greatly overstayed the business failure rate.

6-32. Small businesses lack the resources to compete directly with big businesses.

Answer: False LG: 2/LL: 2 Page: 185

Rationale: Small businesses can often compete successfully against big businesses because they are more nimble and able to offer more personalized customer service.
6-33.
Sharaf decided to work for a floral design shop before opening her own shop. She will find that this was a waste of time as her work is used to make someone else successful.

Answer: False LG: 3/LL: 2 Page: 187

Rationale: Sharaf will gain valuable training and insights into the floral design business by working for someone else. Her experience should reduce her risks and help her operate more efficiently when she starts her own business.

6-34. The personal character of an entrepreneur is irrelevant to bankers when determining the credit worthiness of business loan.

Answer: False LG: 4/LL: 1 Page: 190

6-35. Software designed to help create business plans has proven to be of little value because of the great variety in the types of businesses.

Answer: False LG: 4/LL: 1 Page: 190

6-36. Potential suppliers can be an excellent source of financing for a new business since lending money to a new customer may be very much in their own interest.

Answer: True LG: 4/LL: 1 Page: 190

6-37. State and local governments often act as venture capitalists.

Answer: False LG: 4/LL: 1 Page: 192

6-38. Venture capitalists provide funds for small businesses as part of their philanthropy programs.

Answer: False LG: 4/LL: 1 Page: 192

6-39. As a result of corporate downsizing, Margo lost her job as the director of human resources at a major steel producer. However, she took this opportunity to establish her own business providing temporary employees to area businesses. Margo has likely found that:
A) going into business for yourself can quickly provide security and profits.
B) there aren’t many women going into small business.
C) the service sector is not an area of significant growth.
D) successful big businesses often create profitable opportunities for small businesses.

Answer: D LG: 2/LL: 3 Page: 185

Rationale: As big businesses downsize, they often find that they do not always have the staff they need and are increasingly contracting with small companies to temporarily fill their needs through outsourcing. That’s how it is in business. Big businesses don’t serve all the needs of the market. There is plenty of room for small companies to make a profit filing those niches.

6-40. For prospective entrepreneurs, enrolling in an Introduction to Business or Small Business Management course offered through their community college:
A) is likely to be wasted time since college courses tend to be too theoretical.
B) can be helpful by offering them an opportunity to meet experienced small business owners.
C) would be most helpful after starting their business venture.
D) would offer training equivalent to two years of on-the-job experience.

Answer: B LG: 3/LL: 2 Page: 187

Rationale: One of the best things about small business courses offered by community colleges is that they can bring together entrepreneurs. The advice experienced entrepreneurs can share with those just getting started can be invaluable.

6-41. Motivated by his desire to operate his own business, Caleb is considering the purchase an existing business. As he carefully weights this option, he is likely to find that:
A) very few owners of small businesses have any interest in selling.
B) his potential for success would greatly improve if he started his own new firm.
C) the value of an existing business is determined by what the business owns, what it earns, and what makes it unique.
D) any entrepreneur willing to sell their business is experiencing serious financial problems.

Answer: C LG: 3/LL: 2 Page: 189

Rationale: The value of a firm is based on three things: what it owns, what it earns, and what makes it unique.

6-42. The business plan of a new entrepreneur should include all of the following except:
A) target market.
B) capital required.
C) competitive advantages.
D) names of employees.

Answer: D LG: 4/LL: 1 Page: 189

6-43. After personal savings, the next largest source of capital for entrepreneurs has been from
A) large multinational banks.
B) the Small Business Administration.
C) state and local governments.
D) individual investors.

Answer: D LG: 4/LL: 1 Page: 192
6-44. Which of the following government agencies is responsible for encouraging the development of small business?
A) Small Business Administration.
B) Federal Trade Commission.
C) Entrepreneur Assistance Center.
D) Federal Microloan Authority.

Answer: A LG: 4/LL: 1 Page: 192

6-45. Small business owners often struggle in attracting qualified workers. Which of the following does not contribute to this problem? Small firms offer:
A) less attractive fringe benefits than offered by larger firms.
B) lower wages than paid by large corporations.
C) limited room for advancement.
D) a lack of challenging jobs.

Answer: D LG: 4/LL: 1 Page: 194

6-46. A good business plan will:
A) focus on the big picture and omit the small details of operating the business.
B) describe all aspects of the business, including product, the target market, the nature of the competition, and the owners’ resources and qualifications.
C) be purposefully vague, since specifics can restrict creativity and flexibility.
D) focus on the nature of the business and the target market, omitting personal information about the owner in order to avoid personality issues.

Answer: B LG: 4/LL: 2 Page: 189

Rationale: A business plan is a detailed written statement that describes the nature of the business, the target market, the advantages the business will have relative to competitors and the resources and qualifications of the owner.

6-47. When seeking financial backing from a venture capitalist, a small business owner should realize that the venture capitalist will:
A) charge an interest rate that is much higher than any other lender.
B) not be interested in the management of the business.
C) expect an ownership stake in the company in exchange for the financial backing.
D) demand that the money be repaid within 90 days or less.

Answer: C LG: 4/LL: 2 Page: 192

Rationale: Venture capitalists often ask for a hefty ownership stake in a business in exchange for the cash needed to get that business started.
6-48. A market consists of potential buyers of a good or service. However, for a market to exist:
A) wholesalers and retailers are involved in the distribution of the product.
B) one firm must dominate in sales and product development.
C) people must have unsatisfied wants and needs as well as a willingness and ability to buy.
D) the product must be laboratory tested and approved by the Federal Food and Drug Administration (FDA).

Answer: C LG: 4/LL: 2 Page: 194

Rationale: A market consists of people who have unsatisfied wants and both the willingness and the resources necessary to buy the good or service.
6-49. Bubba, a licensed real estate broker, received notification that his application for a business loan was denied. The bank refused his request because he failed to provide a blueprint identifying the intended target market and competitive strategy. In order secure a bank loan Bubba evidently needs a:
A) bankruptcy lawyer.
B) business plan.
C) venture capitalist.
D) loan advocate.

Answer: B LG: 4/LL: 3 Page: 189

Rationale: A business plan provides a detailed written statement of the nature of a firm, its target market, its competitive advantages, and the resources and qualifications of its owner.
6-50. As a ________ Rick searches for firms in need of additional funding to achieve their goals. In return for his investment, Rick becomes a part owner in the business.. Rick operates as a(n):
A) investment analyst.
B) venture capitalist.
C) corporate raider.
D) securities trader.

Answer: B LG: 4/LL: 3 Page: 192

Rationale: A venture capitalist is an individual or firm that provides startup capital in exchange for a stake in the ownership of the business.
As a small business owner, Tanika can’t afford to provide her employees with the high wages and benefits offered by big corporations. One way to retain her employees and create a high level of motivation would be to:
A) threaten to fire her existing employees and hire new workers.
B) adopt a policy of promoting the workers who have been employed the longest.
C) empower her employees to develop their own ideas
D) hire only family members, since they are more loyal.

Answer: C LG: 4/LL: 3 Page: 194

Rationale: Many small firms motivate workers by creating challenging jobs and treating them respectfully.

6-51. One reason why many U.S. small businesses are not involved in exporting is:
A) there is a limited market for their products.
B) the government’s new homeland security programs limit opportunities for small businesses.
C) many of these firms do not know how to get started.
D) U.S. products are perceived as inferior.

Answer: C LG: 5/LL: 1 Page: 197
6-52. Which of the following best describes the opportunities available to small businesses in international markets?
A) The world is a much larger, and potentially more lucrative, market than the U.S. domestic market.
B) The threat of terrorist activities prevents small businesses from competing internationally.
C) Most foreign buyers prefer to deal with large, well-known corporations rather than small businesses.
D) Higher business costs eliminate the profit opportunities in global markets.

Answer: A LG: 5/LL: 2 Page: 197

Rationale: The U.S. has only about 5% of the world’s population, and there is a growing demand for American goods and services. The Commerce Department reports that while only a small percentage of small businesses export, the number of small businesses involved in exporting has tripled in the last decade.
Peppy is confident that Pizza Whirl will be a success, but only if he has enough money to do things right. Since Peppy has very little personal wealth, he knows he must obtain financial help. In order to be prepared for meetings with bankers and potential investors, Peppy should:
A) hire a public relations firm to develop promotional materials.
B) develop a business plan.
C) read a book on entrepreneurship.
D) create a partnership contract.

Answer: B LG: 4/LL: 3 Page: 181

Rationale: A business plan, which provides a detailed description of the new business, is mandatory when meeting with bankers and investors.

CHAPTER 7

TRUE/FALSE

7-4. Today’s workers require a different managerial style than workers of previous eras.

Answer: True LG: 1/LL: 1 Page: 212

7-5. The need to manage change has become increasingly important with the emphasis on global challenges and opportunities.

Answer: True LG: 1/LL: 1 Page: 212

7-6. Although downsizing has reduced the number of nonmanagerial jobs, it actually has increased the need for middle managers.

Answer: False LG: 1/LL: 1 Page: 212

7-7. Workers are becoming better educated and more self-directed.

Answer: True LG: 1/LL: 1 Page: 212

7-8. Management is the art of getting things done through organizational resources.

Answer: True LG: 1/LL: 1 Page: 212

7-22. The four key management functions are planning, organizing, leading, and controlling.

Answer: True LG: 2/LL: 1 Page: 213-214
7-26. The management function that involves guiding, training, and motivating others to work toward the achievement of an organization’s goals is called leading.

Answer: True LG: 2/LL: 1 Page: 214

7-27. Planning is the function of management that involves anticipating future trends and determining the best strategies and tactics to achieve an organization’s goals and objectives.

Answer: True LG: 2/LL: 1 Page: 213

7-29. Beth has spent the last two hours going over some consumer surveys to see how well her company is achieving its goal of improving customer satisfaction. Beth’s efforts are an example of the controlling function of management.

Answer: True LG: 2/LL: 2 Page: 214

Rationale: Controlling is the function concerned with determining whether or not an organization is progressing toward achieving its goals and objectives.

7-32. Rita is a manager of a medium-sized service company. She is currently involved in redesigning her department to ensure that employees and other resources can respond more quickly and efficiently to the needs of its customers. Rita’s efforts are part of the organizing function of management.

Answer: True LG: 2/LL: 2 Page: 213

Rationale: Organizing involves designing the structure of the organization so that resources can efficiently achieve the organization’s objectives. One of the key objectives today is to find ways to organize businesses so that they please the customer.

7-38. A vision is the overall explanation of why an organization exists and where it is trying to head.

Answer: True LG: 3/LL: 1 Page: 215

7-39. A mission statement outlines the fundamental purposes of an organization.

Answer: True LG: 3/LL: 1 Page: 215

7-45. SWOT analysis helps firms identify both competitive threats and market opportunities.

Answer: True LG: 3/LL: 1 Page: 216
7-47. Tactical planning deals with setting long-range goals, while strategic planning develops the specific strategies needed to achieve the organization’s tactical goals.

Answer: False LG: 3/LL: 1 Page: 216-217

7-48. Strategic planning determines the major goals of the organization.

Answer: True LG: 3/LL: 1 Page: 216

7-51. Contingency planning involves developing alternative courses of action to be used if the primary plans do not achieve the desired results.

Answer: True LG: 3/LL: 1 Page: 218

7-62. SWOT analysis focuses only on the internal activities of the firm, while other analytical tools are used to review the external environment in which the firm operates.

Answer: False LG: 3/LL: 2 Page: 216

Rationale: SWOT stands for strengths, weaknesses, opportunities and threats. While the strengths and weaknesses part of SWOT analysis focuses on internal aspects of the organization, the opportunities and threats part of SWOT looks at the external environment in which the organization operates.

7-72. An organizational chart shows who is accountable for the completion of specific work and who reports to whom.

Answer: True LG: 4/LL: 1 Page: 219

7-76. Supervisory managers are those who directly oversee the activities of workers and evaluate their daily performance.

Answer: True LG: 4/LL: 1 Page: 220

7-77. Middle managers usually are responsible for tactical planning and controlling.

Answer: True LG: 4/LL: 1 Page: 220

7-78. The CIO, COO, and CFO are all management positions that would be classified as being part of top management.

Answer: True LG: 4/LL: 1 Page: 220

7-79. In this day of rapidly changing technology, technical skills are the most important skills for all levels of management.

Answer: False LG: 4/LL: 1 Page: 221

7-85. The purpose of a cross-functional team is to train the members of a single department to perform the functions of other departments.

Answer: False LG: 4/LL: 1 Page: 221

7-86. One result of the trend toward self-managed teams is that more planning, organizing and controlling are being delegated to lower-level managers.

Answer: True LG: 4/LL: 1 Page: 221

7-89. Anyone who is affected by an organization’s policies and products is considered to be a stakeholder in that organization.

Answer: True LG: 4/LL: 1 Page: 222

7-100. A key to having an effective staffing policy is to recruit people much like the people already working at the firm.

Answer: False LG: 4/LL: 1 Page: 224

7-126. The autocratic style of leadership can be very effective in emergency situations.

Answer: True LG: 5/LL: 1 Page: 226

7-127. The traits used by autocratic leaders include warmth, friendliness, and understanding.

Answer: False LG: 5/LL: 1 Page: 226

7-128. The traits that characterize participative leaders include flexibility, good listening skills, and empathy.

Answer: True LG: 5/LL: 1 Page: 226

7-134. When businesses empower their employees, the role of a manager becomes less that of a “boss” and more that of a coach, counselor, or team player.

Answer: True LG: 5/LL: 1 Page: 228-229

7-156. In order to be effective, performance standards must be specific, attainable, and measurable.

Answer: True LG: 6/LL: 1 Page: 231-232

7-157. Accounting and finance are important for control systems because they provide the numbers management needs to evaluate progress.

Answer: True LG: 6/LL: 1 Page: 232
7-158. External customers are those individuals or units that receive services from other units within the same organization.

Answer: False LG: 6/LL: 1 Page: 232

7-160. A corporate scorecard is a broad measurement tool that indicates a company’s progress toward its final destination-profits.

Answer: True LG: 6/LL: 1 Page: 233

7-175. According to well-known management consultant Peter Drucker, managers provide:
A) a direction for their organization and leadership.
B) technical know-how and consistency.
C) scientific analysis of data and philosophical insights into fundamental questions.
D) rules and regulations.

Answer: A LG: 2/LL: 1 Page: 213

7-176. One of the four primary functions of management is:
A) controlling.
B) marketing.
C) financing.
D) designing.

Answer: A LG: 2/LL: 1 Page: 214

7-185. As a manager, two of Sylvia’s strengths are her ability to communicate goals clearly, and her ability to guide, coach, and motivate workers. Based on these strengths, ________ is a management function that Sylvia is likely to be good at performing.
A) controlling
B) planning
C) leading
D) organizing

Answer: C LG: 2/LL: 2 Page: 214

Rationale: Leading involves communicating, guiding, training, coaching, and motivating others to work effectively toward achieving an organization’s goals.
7-186. Amanda, a regional manager for Flairol Cosmetics, has just seen a report showing that sales in her region are lower than anticipated so far this quarter. Her next task is to determine the reason for the disappointing results and find a way to get sales up to their desired level. Amanda’s efforts are part of the ____________ function of management.
A) controlling
B) directing
C) organizing
D) planning

Answer: A LG: 2/LL: 3 Page: 214

Rationale: Controlling involves checking to determine whether goals and objectives are being met, and taking corrective action if they are not.

7-188. Which of the following activities is part of the planning function of a manager?
A) Assigning a particular worker to do a specific task.
B) Looking at market forecasts to identify future business opportunities and challenges.
C) Praising a sales representative who has far exceeded her monthly sales objectives.
D) Conducting a job interview with a potential new employee.

Answer: B LG: 2/LL: 3 Page: 213

Rationale: Planning involves anticipating trends, identifying opportunities and challenges, and devising strategies and tactics that will help the firm achieve its goals and objectives.

7-189. Which of the following activities is part of the organizing function of a manager?
A) Going over a spreadsheet to analyze some financial data.
B) Teaching a new employee how to use a piece of office equipment.
C) Giving front-line workers additional resources needed to provide faster and better service to customers.
D) Developing a broad general strategy to help the organization meet its long-term growth objectives.

Answer: C LG: 2/LL: 3 Page: 213

Rationale: Organizing includes creating the conditions and systems in which everyone and everything works together to achieve an organization’s objectives. Many of today’s organizations attempt to organize in ways that enable them to please their customers at a profit.
7-223. Ed Flavorman, the chief executive of Flavor Best Ice Cream, believes that alternative plans are almost as important as the primary operational plans because the market is so competitive and unpredictable. Ed endorses:
A) tactical planning.
B) retroactive planning.
C) concurrent planning.
D) contingency planning.

Answer: D LG: 3/LL: 3 Page: 218

Rationale: Contingency plans provide alternative courses of action for use if the organization’s primary plans fail to achieve their intended results.
7-226. A(n) __________is used by an organization to show who is accountable for the completion of specific work and who reports to whom.
A) Balance sheet
B) Venn diagram
C) Stakeholder outline
D) Organization chart

Answer: D LG: 4/LL: 1 Page: 219

7-239. Organizations that use self-managed teams often:
A) have very autocratic managers.
B) delegate more planning, organizing and controlling tasks to lower-level managers.
C) eliminate most top management positions.
D) find they must increase in the number of middle managers to manage and direct the teams.

Answer: B LG: 4/LL: 1 Page: 21

7-240. A team of workers chosen from various departments of a firm is called a:
A) unidirectional group.
B) cross-functional team.
C) customer-focused team.
D) stakeholder-oriented organization.

Answer: B LG: 4/LL: 1 Page: 221

7-244. ___________ involves recruiting, hiring, motivating, and retaining the best people available to accomplish the company’s objectives.
A) Directing
B) Planning
C) Leading
D) Staffing

Answer: D LG: 4/LL: 1 Page: 223

7-252. Axel has just been promoted to a position in first-line management. Axel’s new position probably will require him to spend a lot of time:
A) developing strategic plans.
B) evaluating the daily performance of workers.
C) creating a vision.
D) traveling to different worksites.

Answer: B LG: 4/LL: 3 Page: 220

Rationale: First-line managers are responsible for assigning specific jobs to workers and evaluating the performance of employees on a daily basis.

CHAPTER 8

Chapter 8 Test

8-1. The design of a bureaucratic organization assumes a well educated workforce.

Answer: False LG: 1/LL: 1 Page: 243

8-2. To better organize his business, Frank divides the required tasks into smaller jobs and assigns each job to a specific employee. This is an example of departmentalization.

Answer: False LG: 1/LL: 2 Page: 240

Rationale: Dividing tasks into smaller jobs is called job specialization. Departmentalization refers to the process of setting up individual departments to do specialized tasks.

8-3. The division of labor and specialization often improves an employee’s job performance.

Answer: True LG: 1/LL: 1 Page: 240

8-4. Economies of scale occur when a firm operates more efficiently as it grows larger.

Answer: True LG: 1/LL: 2 Page: 241

Rationale: Economies of scale is the concept that the bigger the firm, the more efficient production becomes. This improved efficiency is the result of the specialization of labor and purchasing raw materials in bulk.

8-5. The driving force behind the change in business organizations is the change in consumer expectations.

Answer: True LG: 1/LL: 1 Page: 240

8-6. The degree to which an organization allows lower level managers to make decisions determines the degree of decentralization.

Answer: True LG: 2/LL: 1 Page: 245

8-7. An organizational hierarchy establishes one person at the top of an organization.

Answer: True LG: 1/LL: 1 Page: 243
8-8. The greater the rate of employee turnover, the broader the span of control.

Answer: False LG: 2/LL: 1 Page: 246

8-9. The flatter an organization’s structure, the fewer managers are needed.

Answer: True LG: 2/LL: 1 Page: 248

8-10. In a line organization, there are many specialists who serve as advisors and assistants to the managers who make decisions.

Answer: False LG: 3/LL: 1 Page: 251

8-11. While staff personnel have the authority to make policy decisions, line personnel have the authority to advise and make suggestions.

Answer: False LG: 3/LL: 1 Page: 251

8-12. Cross-functional teams are self-managed groups of employees empowered to work with suppliers and customers to develop new products and give great service.

Answer: True LG: 3/LL: 1 Page: 254

8-13. The design of a bureaucratic organization assumes a well educated workforce.

Answer: False LG: 1/LL: 1 Page: 243

8-14. An organization’s core competencies are those functions that the firm can perform as well or better than anyone else in the world.

Answer: True LG: 4/LL: 1 Page: 257

8-15. Reengineering is intended to improve the performance of an organization through regular, incremental steps.

Answer: False LG: 5/LL: 1 Page: 258
8-16. Reengineering is the fundamental rethinking and radical redesign of organizational processes in order to achieve dramatic improvements in performance.

Answer: True LG: 5/LL: 1 Page: 258

8-17. A firm’s formal organization would be better suited than its informal organization to:
A) create an atmosphere of friendship and camaraderie among workers.
B) find answers to critical problems that require logical analysis.
C) find creative solutions to short-term problems.
D) find a way around bureaucratic rules and regulations in order to get things done quickly.

Answer: B LG: 5/LL: 2 Page: 260

8-18. In an inverted organization, the job of management is to:
A) closely monitor employee performance.
B) establish rules and regulations to guide worker behavior.
C) make all of the basic decisions.
D) assist and support front-line people.

Answer: D LG: 5/LL: 2 Page: 258

Rationale: In an inverted organization, the most important people are the front-line personnel who are in direct contact with the customers. These employees are given the flexibility and decision making authority to meet the needs of these customers. The job of management is to assist and support these contact people, not boss them around.

8-19. Excite Enterprises uses an accounting firm to handle the payroll and tax functions for the firm. Using the services of another firm in this manner is an example of:
A) outsourcing.
B) functional reassignment.
C) core competencies.
D) benchmarking.

Answer: A LG: 4/LL: 2 Page: 257

8-20. As a new employee in a bureaucratic organization, Nancy can expect a great deal of independence and authority.

Answer: False LG: 1/LL: 2 Page: 243

Rationale: In a bureaucratic organization, everyone is expected to follow specific rules. One of the problems with this type of organization is that employees have little flexibility to respond to customer wants and needs.

8-21. Centralized authority provides for the delegation of authority to employees who are then better able to respond to customers’ needs.

Answer: False LG: 2/LL: 1 Page: 245

8-22. Departmentalization creates an environment in which people are trained in a variety of managerial responsibilities.

Answer: False LG: 2/LL: 1 Page: 248

8-23. Rome Corporation is organized into departments such as finance, production, marketing, data processing, and accounting. Rome has chosen to departmentalize by function.

Answer: True LG: 2/LL: 2 Page: 248

Rationale: Departmentalization by function means to group workers into departments based on similar skills, expertise, and resources.

8-24. Line managers issue orders, enforce discipline, and adjust the organization as conditions change.

Answer: True LG: 3/LL: 1 Page: 251

8-25. In large businesses, a line organization provides firms the ability to respond quickly to a changing environment.

Answer: False LG: 3/LL: 1 Page: 251

8-26. Line organizations clearly define the lines of authority and responsibility.

Answer: True LG: 3/LL: 1 Page: 251

8-27. Matrix organizations bring together specialists from different parts of the firm to work on specific projects.

Answer: True LG: 3/LL: 1 Page: 252

8-28. The team specialists in a matrix organization remain part of the traditional line and staff structure.

Answer: True LG: 3/LL: 1 Page: 252

8-29. A matrix organization produces an environment that discourages cooperation and teamwork.

Answer: False LG: 3/LL: 1 Page: 252

8-30. Cross-functional teams are self-managed groups of employees empowered to work with suppliers and customers to develop new products and give great service.

Answer: True LG: 3/LL: 1 Page: 254
8-31. Cross-functional teams serve as advisory committees offering their expertise to line decision makers.

Answer: False LG: 3/LL: 1 Page: 254
8-32. Networking uses communication technology to link organizations allowing them to work together on common objectives.

Answer: True LG: 4/LL: 1 Page: 255

8-33. The Internet makes real time availability of data possible.

Answer: True LG: 4/LL: 1 Page: 255

8-34. Transparency describes the relationship between a firm and its stockholders.

Answer: False LG: 4/LL: 1 Page: 255

8-35. Transparency allows two companies to work more efficiently together.

Answer: True LG: 4/LL: 1 Page: 255
8-36. Benchmarking requires organizations to compare each function against the best in the world.

Answer: True LG: 4/LL: 1 Page: 256

8-37. Competitive benchmarking rates an organization’s products and operations against the industry average.

Answer: False LG: 4/LL: 1 Page: 256

8-38. Competitive benchmarking compares a company’s practices, processes, and products against the world’s best.

Answer: True LG: 4/LL: 1 Page: 256
8-39. Restructuring involves relatively minor changes to an organization to better meet the needs of management.

Answer: False LG: 5/LL: 1 Page: 257

8-40. Inverted organizations empower employees by adding multiple layers of management and long lines of communication.

Answer: False LG: 5/LL: 1 Page: 258

8-41. In an inverted organization, the purpose of management is to assist and support first-line employees, not boss them around.

Answer: True LG: 5/LL: 1 Page: 258

8-42. A firm’s informal organization refers to the structure that identifies the authority, responsibility, and position of people within the organization.

Answer: False LG: 5/LL: 1 Page: 260

8-43. The informal organization of a business can help generate creative solutions to short-term problems.

Answer: True LG: 5/LL: 1 Page: 260

8-44. The formal organization of a firm provides the lines of authority to follow in routine situations.

Answer: True LG: 5/LL: 1 Page: 260

8-45. Organizing a business begins with:
A) acquiring the necessary resources.
B) choosing the best qualified employees.
C) developing an efficient plan of action.
D) determining the work to be done.

Answer: D LG: 1/LL: 1 Page: 240

8-46. Dividing the required work among a group of employees is called a:
A) departmentalization.
B) delegation of responsibility.
C) division of labor.
D) separation of control.

Answer: C LG: 1/LL: 1 Page: 240

8-47. Dividing tasks into smaller jobs is called:
A) job enrichment.
B) job specialization.
C) departmentalization.
D) division of authority.

Answer: B LG: 1/LL: 1 Page: 240

8-48. The process of setting up individual departments to do specialized tasks is called:
A) departmentalization.
B) a division of labor.
C) job specialization.
D) delegation of authority.

Answer: A LG: 1/LL: 1 Page: 240

8-49. In a bureaucratic organization:
A) departments communicate with each other on a regular basis.
B) employees follow strict rules and regulations.
C) customer satisfaction is the number one priority.
D) the first-line workers are empowered to respond to the needs of customers.

Answer: B LG: 1/LL: 1 Page: 243

8-50. One advantage of a bureaucratic organization is that:
A) it is very responsive to the wants and needs of customers.
B) there are very few layers of management.
C) it encourages cooperation among different departments within the organization.
D) employees know what is expected of them.

Answer: D LG: 1/LL: 1 Page: 243