Question 1

In the PEST framework for environmental analysis what does the letter E stand for?

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Correct Answer:

d) Economic

Feedback:

The PEST framework is very simple. There are alternative frameworks that
incorporate the other Es.
Page reference: 24-25
Question 2

Analyzing processes of change in the business environment involves

conceptualizing it as:

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Correct Answer:

c) Dynamic

Feedback:

The business environment is also complex and diverse, but it is rarely static.
Page reference: 24
Question 3

Profit may be defined as:

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Correct Answer:

c) The difference between total production costs and total sales revenue

Feedback:
 Profit is the prime motive of private sector business. In simple terms profit is the
difference between the sum of money you start out with and the sum you end up
with at the end of the transformation process. The point is to 'make money'.
Page reference: 9
Question 4

Who was forced to step down as chief executive after describing one of his
company's products as 'total crap'?

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Correct Answer:

d) Gerald Ratner

Feedback:

Perhaps it was a joke, but this comment seems to illustrate that markets do not
always serve consumers well.
Page reference: 6
Question 5

In which year was the National Minimum Wage (NMW) introduced in the UK?

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Correct Answer:

b) 1999

Feedback:

The NMW was introduced by the Labour government under Tony Blair in its first
term of office. The NMW can be seen as a response to a form of market failure.
Page reference: 8
Question 6

The concept of a firm's 'license to operate' refers to:

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 Correct Answer:

b) The need for a firm to retain its legitimacy in the eyes of the public

Feedback:

This concept is often related to corporate social responsibility (CSR) and the
pressure on business to demonstrate benefit to society beyond the traditional goal of
making profits.
Page reference: 9
Question 7

What does the term 'third sector' refer to?

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Correct Answer:

c) The voluntary sector

Feedback:

The voluntary or 'third' sector is not-for-profit. They often provide goods and services
that would not be attractive to for-profit private sector business. 
Page reference: 10
Question 8

The idea that consumers are in charge of the economic system because their
preferences drive business decisions about what to produce is referred to as:

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Correct Answer:

b) Consumer sovereignty

Feedback:

The idea of consumer sovereignty is challenged by the claim that business is able to
manipulate consumer preferences through advertising and branding. Consumer
activism involves channeling the power of consumer sovereignty in accordance with
 particular values such as fair trade. Consumerism and consumer therapy reflect the
belief that consumption is a prime source of happiness. 
Page reference: 18
Question 9

A multi-national corporation (MNC) is defined by:

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Correct Answer:

a) Carrying out production in more than one country

Feedback:

The defining feature of MNCs is that production is carried out in more than one
country. MNCs vary in size but the largest of them are truly global in the scale of
their operations.
Page reference: 19
Question 10

Which type of organization structure is characterized by departments or units

dealing with specialized tasks?

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Correct Answer:

d) Functional

Feedback:

These functions typically include production, finance, personnel, marketing, sales.

Page reference: 21