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Business Plan Final Project
Redbox Restructure
625 Lincoln Hwy, Fairview Heights, IL 62208
8/16/2022
Galen C. Smith Chief
Executive Officer
Jason K. Kwong Chief
Strategy & Digital Officer
Michael D.
Chamberlain Chief Operating Officer
Christina Chu Chief
Technology Officer
Michael F. Feldner
Chief Marketing Officer
Surojit Chatterjee.
Chief Product Officer
Frederick W. Stein
Chief Legal Officer
Nicole Zinno Vice
President of Human Resources and Internal Communications
Eric Segal Chief Financial
Officer
Brian Fitzpatrick Sr. Hardware Engineering Manager
This document is
confidential.
Table of
Contents
Table
of Contents
Executive
Summary
Vision/Mission
Statement and Goals
A.
Vision Statement
B.
Goals and Objectives
C.
Keys to Success
Company
Summary
A.
Company Background
B. Resources,
Facilities and Equipment
C.
Marketing Methods
D.
Management and Organization
E.
Ownership Structure
F. Social
Responsibility………………………………………………………………...6
G.
Internal Analysis
Products
and/or Services
Market
Assessment
A.
External Analysis
B. Customers
C. Industry
Analysis…………………………………………………………………….8
D. Strategic
Alternatives
Strategic
Implementation
A. Production…………………………………………………………………………...9
B. Resource Needs……………………………………………………………………...9
C. Sourcing/Procurement Strategy……………………………………………………...9
D. Marketing Strategy…………………………………………………………………..9
E. Performance Standards……………………………………………………………..10
Executive
Summary
A. Vision/Mission
Statement
To rebrand the Redbox company and turn it into a crypto currency-based
ATM service that makes its profits by utilizing a fee-based system which would
pull percentage of each user transaction in order to generate a stable profit.
Allow users to withdraw money on demand and bring more money and business to
existing Redbox partners and use current live crypto currency prices to avoid
risking any price drops in the market.
B. Company
Summary
Redbox was a company that focused on kiosks to allow people
to rent DVD’s we would attempt to rebrand the kiosks and change them into a
crypto currency exchange for cash ATM service. We would use existing resources
as much as possible to avoid as many high costs as possible.
C. Products/Services
No products included only the service which allows the user
base to bring crypto currency from wallets then use kiosks as a withdrawal
service at popular locations outside of stores in malls we already have 2000
locations which we would use from existing Redbox agreement.
D. Market
Assessment
Since there isn’t competition for this type of service, we
would be a pioneer in a new service it does come with certain challenges but
they can be mitigated by the team we have working for this. We also need to get
an accounting of user base for more detailed information on total number of
transactions and amount of total profit.
E. Strategic
Implementation
Using existing locations will be a good strategy for the
success but also getting total number of users as well as letting users register
early. We would also use referrals and get blog writers and users to write
articles and guides on the use and provide incentives to help make the service appealing
to those that put effort into helping the success of advertising.
F. Expected
Outcomes
Depending on the outcome of the user base and the amount of
crypto currency transferred we can expect a large profit margin. If we use just
numbers from a place like Coinbase which is only a crypto holding and trade application,
they have a user base of 73 million registered as of 2021 we are providing a
quicker access to withdraw funds. Even if we could capture half of a user base
and people have at least 100 dollars on average we could be looking at a profit
of well over 3 Billion. Costs would depend on whether kiosks could be converted
but the total amount required if that wasn’t the case and ATM need to be
purchased can be found on the chart below. Including the loan amount and
interest.
Vision/Mission Statement and Goals
A. Vision
Statement
The Idea behind choosing Redbox as
a company would be to rebrand pre-existing business model into a model that is
profitable again. Redbox still owns kiosks in many different locations rather
then trying to compete in a market of movies the new business model would focus
on crypto currency. Specifically allowing customers to create an account transfer
different types of crypto currencies to the company website then use the kiosks
in different locations like ATM machines to withdraw crypto based funds as cash
transactions on the fly with a small charge of 1% per transaction. It could
also later be developed into much more or be used in conjunction with marketplaces
for users wanting to cash out products that they sold on cryptocurrency market
places. It could also be expanded outside the US eventually into other
countries for even more coverage and profitability.
B. Goals
and Objectives
First, it’s a pioneering business
model since currently it doesn’t exist but it would make customers more likely
to invest and feel safe with the use of crypto currency as a form of monetary
value. It would also recycle a company model that is dying out with no hope for
return. Also allow for more businesses to adopt crypto and want to have kiosks
in accessible locations for customers in the stores. The fee charged would
generate positive earnings and since it’s more service based then product base
there’s less risk related to having to sell or rent products like DVDs which were
known for being stolen or never returned. The cost of providing this type of
service has some risks to it especially that money would be needed to front the
service before enough is generated from the sale of crypto currencies that
users cash into the company.
C. Keys to Success
First, the website design would be important it would
have to be user friendly and easy to navigate for the user base also it would
need compatibility to allow the transfer of different types of cryptocurrencies. Each crypto currency has a different address so there would need to
be API that allows different types of crypto’s to be transferred into the website.
There would also need to be a waiting period because crypto transfers also
relate to the networks that the crypto comes from as well as gas prices, how
busy the network is. The kiosks would need to be changed from DVD rentals into ATM
machines and users would need a way to access accounts. Such as using security
cards to allow them easy access into the account this way security issues like “shoulder
surfing” or “keylogging” wouldn’t be a temptation. Cards can also be encrypted
for security to protect against card readers. Company
Summary
A. Company
Background
The company provides the service of
allowing customers to convert different types of crypto currencies into withdrawable
cash from kiosk ATM machines located across the US and eventually other parts
of the world. The founder of Redbox is Gregg Kaplan he came up with the idea of
the kiosks and DVD’s that could be returned at any location instead of the one
that they got rented from. He since then stepped down out of Redbox and Anne
Saunders took over. In 2007 Redbox surpassed Blockbuster’s number of US
locations and passed 100 million rentals during February 2008. Then in 2010
passed 1 billion rentals. In 2012 Redbox purchased competitor Blockbuster Express
from NCR for 100 million and acquired over 10,00 DVD kiosks and certain
retailer contracts and inventory. In 2017 Redbox started offering a new video
streaming service on demand.
B. Resources,
Facilities and Equipment
Nothing has to be produced which
makes this business model easier in many ways. Providing a service to exchange
crypto currency into cash is a very easy service to accomplish once it’s set up
properly and can also expand outside of the US eventually for even more
coverage. Since Redbox is still an existing company the land and contracts
still exist from the DVD days of Redbox so currently there’s still 40,000
kiosks in different locations. The kiosks would need to be reworked into computer
systems that could allow users to login to accounts and convert crypto currency
into cash. Loans could be used to help finance the cost of new equipment,
website changes. But also providing providers a share in the stock could be a
way to get extra assistance.
C. Marketing
Methods
Since we aren’t selling a product
and it’s more of a service type of company, we are looking to make 1% on each transaction
at least from the start of it. With the exception being crypto currencies with
high gas fees the rate on those would be higher because it costs more to sell
those currencies in order to make profits. But what makes a service like this more
valuable than exchanges are customers would have quicker access without having
to wait for a check to come or funds to be deposited into bank accounts or
wired like with current exchanges. Adding more locations down the road as well
as expanding to places outside of the US would allow more access to customer
base and working out deals with different retailers and malls that the kiosks
could be put with locations to different stores would help grow the business model.
Some cost to deliver the service is mostly that the kiosks would need to be
connected to the internet in order to be tied to each account as well as manage
how much people can withdraw since crypto currency is volatile amounts would be
updated based on market prices of each crypto currency and not be a fixed price.
A. Management
and Organization
We would be keeping the current management team but
adding in addition people who have experience in the crypto market. The management
team currently aren’t at fault for Redbox failing as a company. The market for
videos and movies changed quite drastically especially with Covid-19 with more
people spending more time stuck at home. Pivoting to crypto and into a new
business model would really mostly require experts in crypto and money exchange
and could be done without changing the current staff. We would make use of a chief
financial officer who has experience in crypto currency as well as a ton of
other experiences such as working for American express. Having someone so experienced
in a wide range of companies of finance and having knowledge of crypto currency
from working at Binance.US will really aid this type of service idea. Even
though Jason Kwong has more experience in digital and mobile gaming his strong
mobile background would help making decisions on phone Apps that could be used
for the business model. Bringing in talent from areas of crypto that the
company lacks without the requirement of losing any of the current experts that
helped make Redbox a success. 
A. Ownership
Structure
The stakeholders would hopefully be
any companies that want these crypto ATMs at locations in-stores this would
also include outside of stores and potentially even places like boardwalks, restaurant’s,
banks, etc. The company would operate as a corporation as a multi-member LLC.
We won’t be mining crypto so we don’t run certain risks from that as well as
needing to write off particular costs associated with it. We will however need
to get licensed as a Money Transmitter Business as a requirement in doing transitions
with crypto currency. Reason is because we will be doing currency exchange and
money transmitting services. This is much different from our previous business
dealings.
A. Social
Responsibility
Most of the social aspects really
don’t apply since we aren’t selling product or dealing with different types of
chemicals machines would need to be serviced regularly to prevent errors and
general upkeep. The company would have its own SOP (standard operating procedure)
to follow any OSH requirements and regulation about office spaces and general
safety. We would also use form 300 and 300a for employee injury reporting. And
all employees upon hiring would be required to complete office related safety
training as well as any other requirements related to safety or operation of
equipment.
B.
Internal Analysis
Some of the strength’s is with no product many of the
aspects of safety and handling aren’t an issue. There’s also not needing to try
to sell a product that people could potentially not want. Once it’s set up this
type of service is much more stand alone aside from machines being serviced and
money being added to the machines. Some weaknesses of it are crypto currency
fluctuates frequently sometimes violently that can affect the prices pretty
hard making sure that there’s good tracking of changes is important and that
crypto currencies are not held for extended amounts of time during bear
markets. The transition from the change in business model might be expensive up
front. And crypto gas fees on transactions could potentially be expensive for
some currencies. Allowing people to convert crypto into cash is a really smart
business model since grabbing rates for percentage of transaction can really
make a lot of money and there’s also the possibility that the crypto currencies
get more valuable after a transaction as well. Moving away from the DVD
business model and product-based model needs to be done right away since we see
how Blockbuster did and ended up with empty stores they sold. Location of
kiosks can be important since we want high traffic areas that also have
businesses nearby so people are enticed to cash out and spend money with retailers.
Crypto is still a growing feature so getting into at such an early point in time
means being a pioneer of a new business. This will also allow for being able to
grow and adapt into other areas of crypto allowing the chance to grow.
Products and/or
Services
Currently crypto is thought of more like play money or fake
money to many because of the lack of being able to use it to buy products and
services. By providing a service that allows crypto to be treated like a
tradable product in order to cash out money on the fly it starts a whole new dynamic
that makes people feel like investing in that form of currency is beneficial.
It also helps businesses selling products because more people will have more money,
they can get access to from consumers. The closest thing to this is credit card
companies allow customers the ability to pay bills using crypto but often at really
high rates of transfer because of how volatile crypto can be. I myself invest in various types of crypto as
well as making use of stake mining but anyone who has tried to invest will
easily see how frustrating it can be to pull money out of any coin exchange or
wallet and get a fair price without paying some kind of fee or having to wait
weeks for the funds to clear. Even marketplaces like Coinbase they make it
easy to put money in and do trades but when its time to cash out it’s becomes
difficult.
Market Assessment
A. Examining the General Market
Considering that the
market is based on crypto currencies of different types and the ability to
convert crypto coins into cash that can be withdrawn through kiosks the market
is really a new niche service which helps give cryptocurrency a feel of being
an actual monetary value instead of what many feels is like fake fiat tokens. Also,
because it’s more of a service using existing currencies and old technology this
type of service targets a wide demography of users and by allowing businesses
to put these service machines in locations it helps fulfill priorities from not
just consumers benefiting from being able to withdraw cash but also retailers
who sell products. We also don’t depend on product development cycles or have
to come up with currencies or tokens because we are using all existing from the
market. If we think about customer needs and we look at cryptocurrency like
for example Bitcoin currently if we hold bitcoin in a wallet like Coinbase then
go to sell it we first have to wait for it to sell at the price we set then if
we want to cash out of Coinbase we have to wait and extended time to get our
money minus whatever fees are required but the biggest part is convivence. We
can’t just go to our favorite store with a USB drive and pay with BTC coins. We
have to go through the long process of selling them cashing out and waiting until
funds are released to us. But with an ATM service it would allow people to
claim money at the cost of the different types of coins. And the more places we
add machines the more growth potential. It’s also very easy to transition to
other countries with the same service. No product or service is ever free
completely from threat’s especially ones related to crypto currency. You see
how volatile different cryptocurrencies can be so sometimes holding for a long
period of time can be dangerous it can be mitigated by selling it as soon as it’s
collected. We also run the risk of security but preventing people from
accessing card readers on the ATM’s would stop threats of ID theft or viruses
which are dropped into the ATM machine from the card reader. Also, when there’s
power outage or lack of internet to connect to the website and database. And of
course, the risk of security hacking through websites or phishing scheme’s
people are victims for. But opportunities wise crypto can also go the other way
and be a positive increase in value. Being able to work with different retailers
builds relationships and brings trust to crypto currencies. The main competition
would be banks but only if they choose to adopt crypto. Most banking still
treats crypto as fake non-monetary value and doesn’t allow this type of process.
This is why jumping on this type of industry now and advertising as well as building
relations would allow a thriving business model that could easily take
advantage of a niche that hasn’t been saturated yet.
The biggest trends are
that so many different coins keep coming out and people investing in them that’s
why the ability to add all sorts of different coins would be beneficial but
also not holding for long term especially on lesser known or trusted ones is
important for risk-based safety. The biggest driver of change is also what
political and legal issue can affect it and that is the outlaw of cryptocurrencies. Some countries have done that in an effort to stop their own
currencies from being devalued or losing trust. If we take into account a
country like Japan. Japan has reverse interest rates which simply put means
that money that is stored in banking system gets reduced instead of earning
interest. People of Japan follow the lifestyle of spend money like crazy
because saving it doesn’t work and they feel it's better to enjoy it. But crypto
currency is also very popular in Japan even with games supporting it because crypto
currency isn’t affected by reverse interest rates because it’s all built off
blockchain and can’t be affected by political and economic changes. But that
also means that eventually from a political point of view that governments
could outlaw crypto or make it illegal to own which would hurt this type of
service.
B. Customer Analysis
Customers can be anyone who currently holds a type of crypto
currency so really anyone. There are no limitations of customers. And with the
correct type of guides and instruction showing how easy it could be to work
with this it would be easy to teach people who haven’t dealt with crypto
currencies. We aren’t selling services so that doesn’t apply but the service
lets people get cash for crypto currency outside of businesses that they need
money for and helps consumers of product build more potential customers into
the businesses they have. Retaining customers would be easy because once they
make an account, they could keep utilizing different crypto currencies. The
main cost is the fronting of money before the service can build enough from
selling currencies to self-sustain and make profits from selling crypto.
C. Industry Analysis
One of the biggest
advantages is advertisement currently no one does the same kind of service that
means advertising for that specific niche becomes much cheaper than battling a competitive
niche that everyone currently has control over. Marketplace for the service
really is more giving customers a way to get money for crypto and for
businesses to not have to deal with adding these forms of payment instead they
deal with the product selling side but it puts more money in consumers hands
which benefits the businesses greatly.
D. Strategic Alternatives
Making use of AdSense to advertise on all the keywords that
are relevant to the type of service provided. Employing blog writers and reviewers
to post about the service and to make guides for the service. Making a referral-based
reward system such as referring 3 friends who deposit cryptocurrency gets a
percentage of the value deposited to gain more advertising and spreading. Using
social media and building a website that is not only optimized but also well
built and written to show professionalism. We could also make use of video
advertisements and also work with different crypto selling platforms for
advertisements since they would benefit by people using them to buy crypto to
bring it to our platform service as well as use them to sell any crypto, we
gain.
Strategic Implementation
A. Production
Production doesn’t apply as much but building the ATM machines
for use and website as well as the software used will be the hardest part of
what could be considered production. And making sure security is all set for
the service and that there are not leaks of it. It would involve hiring programmer’s
and people who work with API for websites as well as a good team of people that
have worked with crypto currencies and implementation. Timeline wise it shouldn’t
take too long with the right team of professionals working on it.
B. Resource Needs
a)
Human
We
need people with a knowledge and skill set for crypto based API to build the
website, allow us to transfer and get crypto prices in real time. We need
website designers to make the site functional and people with SEO knowledge to
handle advertisement and experience in advertising through different avenues. We
also need people with writing skills that can help advertise with blogs and making
guides on usage. We will have our HR team work on recruiting people with the
right skills set. We do have an expert in the field of crypto and can brainstorm
about how to go about gathering the right talent outside of normal job postings.
b)
Financial
Base
starting money would be the most difficult part we are dealing with ATM service
so there has to be some money to run the ATM service at least until a good
amount of crypto currency is collected. And the costs to change the software and
old kiosks into brand new ones that perform the needed.
c)
Physical
The
main physical resource is getting our kiosks serviced to be our new ATM
machine. We also need to clear out any old products from any existing machines
and sell them off. Since our new business model really is more a service, we
don’t require much for physical resources we are using an existing company so
we have buildings and some real-estate and resources already it comes down to
more reshaping into the business we need to be.
A.
Sourcing/Procurement Strategy
We are dealing with a service that helps
others who sell products our user base wants us because it’s a quick way to get
money to purchase products and convenient to withdraw money without the need to
wait days or weeks for funds to be transferred. We will use the internet as the
main venue for gaining our user base and the companies who want to gather but
we don’t have to be limited just by that. Also, the following from all the meme
stock retail users would notice that the company is in a transition period as
well which would serve as another way to grow this new technology.
B.
Marketing Strategy
Sales plan mostly applies to
products but our service will be there for companies to profit users to also
benefit and we will make our money via the fees collected. We will use all
different areas of advertising like was explained before blog writers, AdSense advertisements,
Referral based advertisements. We plan on getting more contracts with new
businesses to put our ATM machines outside that let users withdraw money. Since
we aren’t limited by product outlet, we don’t have to be picky about locations
we offer our services too. We can even look to locations such as casino’s amusement
parks museums and places that have high traffic amount that people need cash
fast. Pricing the service would be percentage based this way rather then having
a flat fee that most ATM’s do per transaction we don’t punish users that only withdrawal
smaller amounts.
a) Hedging, forward pricing, options
This type of service isn’t really affected by hedging or forward pricing for the type of service. Also, because we are using a live check on crypto currencies that would help when doing transactions because if price changes happen, we wouldn’t be stuck with a price when the currency was quite lower.
b)
Contracting
Marketing contracting would really be the only way to really promote this type of service since we aren’t producing a certain type of product.
c)
Insurance
Many
insurance companies don’t offer liability for crypto this is because crypto is
a relatively new product itself. As liability insurances start offering crypto,
we would make use of it. But we would more or less need identity theft
insurance because the only good way to verify people for accounts on our crypto
service would be the requirement of personal information identification.
C.
Performance Standards
Most important performance standards would be problem-solving, accountability and time management. We are moving the company in a way that we are reforging the business model and into a unique service so problem solving will be the hardest aspect to tackle. How do we get the kiosks setup properly what software and risks do we have? What should the website design be like? Lots of different problems with different ways to solve them. Then the accountability aspect which is a big one since we are having to deal with since we would have to handle personal data for verification purposes. This way we don’t have to worry about scammers or hackers cause people need to verify for legal reasons. For staff we would go with an analyze and reward model to recognize members who help provide new ideas and help contribute to our overall success as a business. We will work to involve every level of staffing so that they don’t feel like any one particular person is under scrutiny. We will have open communication on all levels of management and work more on team building as a group to allow different areas of the company to build relationships while recognizing them for good work standards. We would use industry benchmarks such as banking and ATM companies since there’s not much current competition in crypto currency and as other competitors emerge, we will shift our focus on those which directly compete for the same business space.
Financial
Plan
A. Financial
Projections
When it comes to funding the business,
we are using an existing company so any assets left over could be rolled into
the new business but the new model of crypto currency transition we would sell
the currency as it gets obtained from the business model. We could also use
stock offering to raise funds or look into loan options as well but we only
need to front the initial amount which makes the ATM system functional and once
we get enough transitions from crypto it should be a pretty easy system to
figure out. We would gate the desired debt and equity position initially by
allowing sign-ups preemptively and use that as a basis to figure out how much
crypto currency accounts are willing to do transitions with and use that as a
base number but also account for newer member use. But once the transition’s
start for our dollar to crypto we can start selling crypto to grow our funds.
Since we really only need the base setup amount, we shouldn’t have to make use
of leasing and since the business model deals in money once we have it up and
running our starting capital should continue to grow including the money we
take in fees. Like specified we can do stock offerings to generate equity and
since the meme reddit stock craze Redbox had quite the capital raising just
with the masses buying stock and pushing the price and market capital. The only
real risks are making sure process and system is secure from a hacker or cybersecurity side of financial risks. Not holding crypto long term is another thing
that helps manage the financial risks. While there is a potential to make money
‘if’ the crypto currency increases in price we see how inflation and the market
can reverse just as easily as it can increase. So, we won’t be holding crypto
long term and be trading it right after we obtain it to avoid losing money. If
it goes up great but the main thing is to keep growing our equity and building
capital. The main flow budgets that are really important is leaving enough
funds in our ATM service and also for the team to do maintenance on the ATMs
themselves. We aren’t trying to use assumptions to base our overall equity we
will use user base numbers to try to get the best projection closest to the
number of overall equity requirement. When we start getting transitions and
generating money, we can then use that to figure out if the percentage of the
fee charged is enough and change accordingly based on actual physical data
instead of assuming that from a financial aspect that projections are good. Monitoring
business performance will be based on customer satisfaction via referrals and
user input. We will also look at subscriber amount and also over all financial performance
from our ATM’s and amount of money we are pulling in. We will monitor KPI and
using SMART criteria for performance we would look for a Gross Profit margin of
at least 30% which is what the old business model would pull in on average. If
we can meet or beat that metric then we know the business model is doing really
well. If we can’t meet or beat the 30% then we would look for ways to rework
and cut waste and bring in new ideas to work towards getting to meeting the
proper metrics.
B. Contingency
Plan
The plan should be pretty solid since
the business model is a new model the only trouble could be changing the kiosks
into an ATM system so if it's not possible in an easily manageable method the
main contingency plan would be look to purchase ATM machines which could run
into a lot of cost on average if we purchase them new it could run into $8,000
new and $1,600 used and loading them to all 2000 locations could run into 16
million to work out that would then run into cost problems. And then at a
minimum at least 15 million to stock them with enough cash for the starting and
to be enough to run. That could be a total of around 31 million totals. For
each management team to account for something happening to a key member we would
make use of a junior chief for each of the main key departments this way if we
have a key member loss we wouldn’t be crippled while we either decide whether a
replacement is needed or whether it’s a situation, we can just wait for it to
be resolved over a period of time.
Final Test BUS101
The main purpose of business is to provide ____________________.
a. goods and services
b. community service
c. educational assistance programs
d. a healthy work environment
Profits are an indicator of which of the following?
a. A business' success
b. The amount of capital investment
c. The owner's commitment
d. The level of competition
Each of the following is a benefit of business, EXCEPT which one?
a. Business enhances the income of owners.
b. Business creates jobs.
c. Businesses produce goods and services.
d. Business improves the quality of education.
If the cost of materials increases, which of the following should the business consider as a result?
a. Meet with competitors and encourage them to raise prices to reflect the increased cost of materials.
b. Immediately raise the price of the product to reflect increased costs.
c. Analyze all costs and determine whether there is a way to reduce other production costs and offset the increase in materials.
d. Determine what the competitor is doing and adjust your price accordingly.
In which of the following ways does a service provider differ from a goods producer?
a. services are produced and consumed simultaneously.
b. Services do not have customers.
c. Services don't need to be branded.
d. Services are easier to produce.
Which of the following does a global marketplace present?
a. Few competitive risks.
b. A safe haven for financiers.
c. Business opportunities
d. Tax loopholes to be exploited.
If a business wants to maintain growth in a maturing industry, which of the following should be considered?
a. Moving operations offshore
b. Reducing the workforce
c. Product diversification
d. Purchasing new equipment
Which of the following best describes an entrepreneur?
a. A business owner
b. A person who embraces risks and opportunities
c. The owner of a profitable business
d. A person who lacks vision
Which of the following defines the U.S. economic system?
a. Planned economy
b. Socialism economy
c. Mixed market economy
d. Market economy
Which of the following is the determining factor of a country's economic system?
a. Members of the G-10
b. The International Monetary Fund (IMF)
c. Political leaders
d. Popular vote
Which of the following is a factor of production?
a. Competitive environment
b. Capital
c. Trade Agreements
d. Exchange rates
Which of the following best defines the term "economic system"?
a. How a country determines currency
b. The system for determining interest rates
c. The system for allocating resources
d. A system for creating trade agreements
Which of the following economic systems has the greatest government control?
a. Planned economy
b. Privatization
c. Mixed market economy
d. Market economy
As gasoline prices increase, which of the following will happen?
a. Demand will increase.
b. Supply will be reduced.
c. Supply will increase.
d. Demand will drop significantly.
In a pure monopoly, price of a product is determined by which of the following?
a. Consumer Price Index (CPI)
b. Regulatory body
c. Referendum to the voters
d. Alternative product pricing strategy
If a company believes the business sector is saturated with competitors, which of the following should it consider?
a. Product differentiation
b. A buy-out or acquisition of some of the competition
c. Create a price war with the competition
d. Relocation of the business
Decisions about what to buy and what to sell in the United States are determined primarily by which of the following?
a. Laws of supply and demand
b. Projected business profit
c. Market price
d. Demand curve.
If the Gross Domestic Product (GDP) in the United States increases, which of the following will probably result?
a. Employment levels will increase.
b. Employment levels will remain flat.
c. Unemployment rates will increase.
d. Wages will increase.
Each of the following is an element of private enterprise, EXCEPT which one?
a. Government regulations
b. Private property rights
c. Competition
d. Profits
Which of the following refers to the total quantity and quality of goods and services that can be purchased with the currency used in a country's economic system?
a. Standard of living
b. Purchasing power
c. GDP per capita
d. Gross National Product (GNP)
What are beliefs about what is right and wrong or good and bad called?
a. Motivators
b. Rules
c. Laws
d. ethics
What is likely the single MOST effective step that a company can take to set ethical standards?
a. Offer large cash awards for whistle-blowing.
b. Suggest that employees take ethics training.
c. Post Ethical Rules on bulletin boards.
d. Demonstrate support from top management.
What term refers to the way in which a business tries to balance its commitments to group and individuals in its social environment?
a. business ethics
b. social responsibility
c. stakeholder consciousness
d. corporatization
What is the term given to the groups, individuals, and organizations that are directly affected by the practices of an organization?
a. primary agents of interest
b. social auditors
c. organizational stakeholders
d. senior managers
What must every corporation do in maintaining and reporting its financial status?
a. purchase stocks on margin
b. use creative accounting practices
c. aim to maximize predicted profit margins
d. conform to generally accepted accounting principles
Which of the following occurs when someone uses confidential information to gain from the purchase or sale of stocks?
a. insider trading
b. identity theft
c. a margin purchase
d. a guarantee
Carla's Collegiate Exchange, a popular bookseller among university students, has just drafted its mission statement. The company seeks to sell books on a sliding scale based on a student's available income. What does this MOST likely reveal about the company's ethical code?
a. The company believes financially challenged students should not be hindered from succeeding educationally.
b. The company is most motivated by a desire for greater profits.
c. The company is not concerned with fostering the success of others.
d. The company believes that poor individuals should be given a greater chance at success that wealthy individuals.
What is a social audit?
a. an examination of a company's financial records to determine their conformance with GAAP
b. a program to promote consumer activism
c. a check on consumer rights
d. an analysis of a firm's success in using funds earmarked for meeting its social responsibility goals
What act was passed in 2002 as a response to a number of highly publicized accounting scandals?
a. Sarbanes-Oxley Act
b. McCain-Feingold Act
c. Dodd-Frank Act
d. Securities and Exchange Act
What is the term for an employee who detects and tries to put an end to a company's unethical, illegal, and/or socially irresponsible actions by publicizing them?
a. whistle-blower
b. corporate lookout
c. fast-track manager
d. government inspector
Which of the following has NOT been identified as a basic consumer right?
a. a right to safe products
b. a right to low prices
c. a right to be heard
d. a right to choose what they buy
Which of the following is NOT an element of green marketing?
a. profitability
b. sustainability
c. production processes
d. package reduction
Why has climate change become a major issue for both business and government?
a. The body of scientific evidence is inconclusive.
b. The solutions to the problems are unanimous.
c. The effects are confined to national boundaries.
d. The change in climate patterns affects the entire planet.
Jordan is a recent college graduate with a degree in computer programming. He has just begun his first full-time job and is excited to apply the skills that he worked so hard to acquire. Though he excelled as a student, Jordan is anxious about how successful he will be as an employee. When an opportunity unexpectedly presents itself to take credit for a brilliant software program that someone else wrote, Jordan does not resist and claims the program as his own. Which of the following statements must be true about Jordan's decision?
a. It does not reveal anything about his beliefs or character.
b. It raises questions about his personal ethics.
c. It will strengthen his professional skills.
d. It was made with careful thought.
Which of the following would NOT be included among the primary agents of interest with regard to a company's ethical behavior?
a. stockholders
b. unions
c. bloggers
d. customers
What is the term for an activity that may benefit the individual to the detriment of his or her employer?
a. agency dispute
b. proactive stance
c. conflict of interest
d. ethical standard
A husband and wife have just opened a gymnastics center, with the hope of training future Olympians. They desire to run their center in a socially responsible way. Which of the following should they certainly avoid?
a. purchase of substandard gym equipment
b. advertising methods intended to profit the center
c. doubling of enrollment fees for the program
d. provision of attractive salaries for employees
The Omega Group's mission statement conveys a primary commitment to compassionately improving the lives of elderly citizens. What is LEAST likely to be true of the company's ethical code?
a. The company values the well-being of others.
b. The company believes that all people have worth.
c. The company prohibits age discrimination when hiring employees.
d. The company expects and requires elderly citizens to contribute to society.
Which of the following should be the first step in assessing ethical behavior in a certain situation?
a. Seek the advice of managers.
b. Make a judgment based on the outcome of the activity.
c. Collect facts related to the situation.
d. Gather a range of opinions on the effectiveness of the policy.
Which statement about codes of ethics is FALSE?
a. Fewer and fewer companies are adopting codes of ethics.
b. Codes of ethics are determined by company managers.
c. Some ethical responses can be learned through experience.
d. Social responsibility involves providing quality products and pricing products fairly.
An entrepreneur, Christina Rossini, is planning to open a small chain of 4 to 6 pizza stores under the brand name "Redenda Pizza." The name comes from combining the first names of the entrepreneur's grandparents. Christina wants to have a competitive advantage by offering innovative and distinct specialty pizzas and by offering the freshest ingredients. However, she is concerned that without proper planning, her venture will not be successful.
Answers to which of the following questions would be LEAST relevant to determining whether Christina has located a good opportunity in starting Redenda Pizza?
a. Are there other pizza restaurants in the immediate vicinity of the planned location?
b. Is the business of other pizza restaurants in the city growing?
c. Does the planned location of the restaurant have competitive rent?
d. Will Redenda Pizza offer unique ingredients in its food offerings?
e. Would Christina bring unique talents and ideas to a restaurant business?
What type of company has stock that is widely held and available for sale to the general public?
a.private corporation
b.public corporation
c.general partnership
d.limited liability corporation
e.professional corporation
According to SBA estimates, what percent of all new businesses can expect to survive for at least four years?
a. 14 percent
b. 24 percent
c. 44 percent
d. 64 percent
e. 84 percent
What is the name of the document in which an entrepreneur summarizes his or her business strategy for a proposed new venture?
a. success chart
b. director's guideline
c. financial blueprint
d. business plan
e. balance sheet
Which of the following helps entrepreneurs gain skills that are essential for running a business?
a. ESOP
b. SBICs
c. SEC
d. LLC
e. SBA
Why are lenders most willing to loan to corporations?
a. Continuity and legal status are assured.
b. Links with owners and founders are established.
c. Professional management teams can be changed.
d. Commitment to expansion is readily available.
e. Brand and marketing strategies can be diversified.
The U.S. Department of Commerce considers a business "small" if it has fewer than how many employees?
a. 10
b. 50
c. 100
d. 500
e. 1,500
What is the MOST effective way for an entrepreneur to become a competent manager?
a. working alone
b. relying on luck
c. getting a college degree
d. being open to opportunities
e. working for a successful company first
Which of the following is the MOST significant recent trend in small-business start-ups?
a. entrepreneurs who cross over from big business
b. increased opportunities for minorities
c. increased opportunities for women
d. emergence of e-commerce
e. global economic downturn
Entrepreneurs often have more than one goal for starting a business and becoming self-employed. Which of the following reasons is the LEAST common goal of entrepreneurs?
a. to seek independence and be their own boss
b. to earn a comfortable living for a period of time
c. to grow and expand a current business
d. to meet community or social obligations
e. to provide for their financial needs
What are specific locations of Ramada, McDonald's, and Subway examples of?
a. government entities
b. university sponsored businesses
c. franchises
d. networking businesses
e. cooperatives
Which of the following occurs when two firms combine to create a new company?
a. acquisition
b. takeover
c. venture
d. divestiture
e. merger
Approximately what percent of all U.S. businesses employ 20 or fewer people?
a. 89 percent
b. 69 percent
c. 49 percent
d. 29 percent
e. 19 percent
What type of business has two or more owners who share in the operation of the firm and are financially responsible for its debts?
a. corporation
b. partnership
c. cooperative
d. conglomerate
e. nonprofit
Today, what percent of all businesses in the United States are registered as sole proprietors?
a. 94 percent
b. 74 percent
c. 54 percent
d. 28 percent
e. 10 percent
Which of the following factors MOST contributes to small business failure?
a. managerial incompetence or inexperience
b. bad product design
c. legal problems
d. time spent raising capital
e. personnel issues
What is the major drawback of accepting venture capital?
a. sharing company control
b. having to pay high interest rates
c. limiting expansion
d. facing a short repayment period
e. having to write a proposal
Which of the following is a partner who actively manages a firm and has unlimited liability for its debts?
a. limited partner
b. general partner
c. stockholding partner
d. public partner
What is the main reason why women start new businesses?
a. need to earn more money
b. preference for working alone
c. opportunities for family members
d. control in organizing their time
e. desire to employ other women
An entrepreneur, Christina Rossini, is planning to open a small chain of 4 to 6 pizza stores under the brand name "Redenda Pizza." The name comes from combining the first names of the entrepreneur's grandparents. Christina wants to have a competitive advantage by offering innovative and distinct specialty pizzas and by offering the freshest ingredients. However, she is concerned that without proper planning, her venture will not be successful.
Which of the following, if true, would strengthen the case that Christina has a good opportunity in opening a new pizza restaurant?
a. There are many existing pizza restaurants in Christina's city.
b. The pizza business in Christina's city has remained largely unchanged for many years.
c. Restaurant consumers in Christina's city most frequent Mexican restaurants.
d. Pizza restaurants require several experienced employees to be successful.
e. Pizza restaurants can be found in almost any town in the United States.
ABC Company in the US has given exclusive rights to XYZ Company in Switzerland to manufacture its products. What is this an example of?
a. a foreign direct investment
b. a licensing agreement
c. a branch office set up
d. a strategic alliance
Which of the following refers to the situation when a country's imports exceeds its exports?
a. balance of payments
b. balance of trade
c. trade deficits
d.trade surplus
Ford, an American car company, purchased Volvo, which is based in Sweden. What is this an example of?
a. a multinational firm
b. a licensing agreement
c. a foreign direct investment
d. a strategic investment
Which of the following is a government payment to help a domestic business compete with foreign firms?
a. revenue tariff
b. import buyback
c. export rebate
d. subsidy
Which of the following exists when a country can produce something more cheaply and/or of higher quality than any other country can?
a. monopolistic advantage
b. resource advantage
c. absolute advantage
d. national advantage
National competitive advantage derives from four conditions, one of which is factor conditions. What do factor conditions include?
a. customers, suppliers and labor
b. product quality, productivity, and profits
c. labor, capital, entrepreneurs, and physical resources
d. strategies, structures, and rivalries
Which of the following BEST describes a positive trade balance?
a. the economic condition in which a country's exports exceed its imports
b. the economic condition in which a country's imports exceed its exports
c. the economic condition in which a country's inflow of money exceeds its outflow
d. the economic condition in which a country's outflow of money exceeds its inflow
e. the economic condition in which a country's natural resources exceed its human resources
Under which of the following treaties are Canada, the United States, and Mexico gradually eliminating tariffs and all other trade barriers?
a. the EURO Agreement
b. the Pan-American Agreement
c. the North American Free Trade Agreement
d. the General Agreement on Tariffs and Trade
e. the G-3 Free Trade Agreement
Which country dominates the Pacific Asia region economically?
a. South Korea
b. China
c. Indonesia
d. Japan
e. Taiwan
Which country is the world's largest marketplace and most stable economy?
a. the United States
b. Canada
c. Germany
d. Japan
e. China
Which of the following goals is a primary purpose of tariffs on imports?
a. maintain domestic competitiveness
b. decrease exports
c. increase imports
d. subsidize domestic industry
e. promote free trade
Which of the following denotes the international organization strategy of finding a partner in the country in which a company would like to conduct business?
a. opening a branch office
b. developing a strategic alliance
c. forming an independent agency
d. outsourcing
e. investing directly in a foreign venture
Which of the following denotes a government order forbidding exportation and/or importation of a particular product from a particular country?
a. tariff
b. embargo
c. subsidy
d. local content law
e. business practice law
Which organization created the classification of countries based on per capita income?
a. the World Bank
b. the World Trade Organization
c. the International Monetary Fund
d. the European Union
e. the North American Free Trade Agreement
Which of the following is illegal in the United States?
a. dumping, but not cartels
b. cartels, but not dumping
c. only certain kinds of dumping and cartels
d. neither dumping nor cartels
e. both dumping and cartels
In some South American countries, it is sometimes legal to bribe other businesses and government officials, while this practice is illegal in the United States. Which of the following refers to this type of policy?
a. protectionism
b. business practice laws
c. free trade agreements
d. fair trade agreements
e. local content laws
Which of the following countries is the world's third largest economy, behind that of the United States and European Union?
a. China
b. India
c. Brazil
d. Japan
e. Russia
What are products that are created domestically and transported for sale abroad?
a. dumped goods
b. exports
c. imports
d. buybacks
e. domestic goods
What is a difference between an international firm and a multinational firm?
a. Multinational firms design, produce, and market products in many nations, whereas international firms are based primarily in one nation.
b. International firms design, produce, and market products in many nations, whereas multinational firms are based primarily in one nation.
c. International and multinational firms are the same thing.
d. Multinational firms are concerned primarily with foreign markets, whereas international firms are concerned primarily with the domestic market.
e. International firms are concerned primarily with foreign markets, whereas multinational firms are concerned primarily with the domestic market.
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What are products that are created abroad and then transported and sold domestically?
a. dumped goods
b. exports
c. imports
d. buybacks
e. domestic goods
Plants Galore is a business selling a range of indoor plants. In the past there has been a problem with plants being stolen by staff. Which of the following represents the biggest limitation in reference checks as a reliable way of assessing the value of prospective employees?
a. Reference checks are illegal in a number of states.
b. Reference checks obtained from previous employers are out of date.
c. Some previous employers may no longer be in business.
d. Some reference checks can be time consuming.
e. Reference checks tend to only tap positive recommendations.
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Fletcher is meeting with each of his subordinates to discuss their performance over the past year. What process is he involved in?
a. job description
b. labor negotiations
c. vestibule assessment
d. performance appraisal
e. financial remuneration
Which of the following is considered the starting point of effective human resource management?
a. external staffing
b. recruitment
c. planning
d. financing
e. compensation
What is the process of dealing with employees who are represented by a union?
a. labor relations
b. human resource management
c. negotiation
d. arbitration
e. contingency recruitment
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Which plan refers to compensation other than wages and salaries and other incentive pay offered by a firm to its workers?
a. profit-sharing
b. gainsharing
c. benefits
d. pay-for-knowledge
e. variable
What does turnover refer to?
a. people quitting their jobs
b. managers reprimanding staff
c. employers cutting down costs
d. employees calling in sick
e. benefits being improved
Which would an employee who is productive but refuses to help others or the organization be lacking in?
a. organizational citizenship
b. workplace aggression
c. performance behavior
d. personal productivity
e. self-esteem
Which of these is one of the "big five" personality traits?
a. Openness
b. Logic
c. Creativity
d. Organization
e. musical talent
What is the term for behavior that is related to doing a certain job?
a. performance behavior
b. interpersonal behavior
c. disruptive behavior
d. potential behavior
e. assertive behavior
What is the Hawthorne effect?
a. the belief that employees are motivated by money alone
b. the conclusion that workers are more productive if management pays attention to them
c. the determination that the level of lighting in a workplace has no effect on productivity
d. the theory that workers are more productive if their jobs are analyzed closely
e. the unspoken agreement between the employee and the employer
Which of the following statements is the MOST accurate?
a. Effective managers lead for stability, whereas visionary leaders lead for change.
b. Effective leaders lead for stability, whereas visionary managers lead for change.
c. Visionary managers lead for stability, whereas effective leaders lead for change.
d. Strategic leaders lead for stability, whereas transforming leaders lead for change.
e. Strategic managers lead for stability, whereas transforming managers lead for change.
Which of the following BEST describes the effects of leadership neutralizers in an organization?
a. They tend to make leader behavior ineffective.
b. They tend to make leaders more charismatic.
c. They tend to outweigh the need for leader behavior.
d. They tend to make managers become effective leaders.
e. They tend to make leaders more neutral toward employees.
Managers at Adidas had a hunch that their sponsorship deal with the Yankees would be a good one. Their feelings were based on what concept?
a. escalation of commitment
b. risk propensity
c. intuition
d. perception
e. rational decision making
Which of the following is the name for choosing one alternative from among several options?
a. decision making
b. assessment
c. evaluation
d. discernment
e. arbitration
Recent corporate scandals at firms like Enron have brought increased attention to what area of leadership?
a. virtual leadership
b. ethical leadership
c. strategic leadership
d. employee-focused leadership
e. charismatic leadership
Which of the following BEST describes a mission?
a. an objective that a business hopes and plans to achieve
b. a broad set of organizational plans for implementing decisions made for achieving organizational goals
c. the shared experiences, stories, beliefs, and norms that characterize an organization
d. an organization's statement of how it will achieve its purpose in the environment in which it conducts business
e. an organization's competitive standing in the marketplace
Which of the following is TRUE about corporate culture?
a. It can direct employees' efforts toward goals.
b. It is usually determined by outside forces.
c. It cannot be changed.
d. It is easy to change.
e. It rarely affects newcomers in an organization.
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Kohler makes and markets familiar kitchen and bathroom fixtures. But Kohler also offers a breadth of other products and services, including furniture, tile and stone, and even small engines and backup power systems. It also owns resorts and spas. Kohler ties this diverse product portfolio together under the mission of "contributing to a higher level of gracious living for those who are touched by our products and services." Kohler's overall objective is to build profitable customer relationships by developing efficient yet beautiful products that embrace the "essence of gracious living."
If Kohler became known as a provider of products and services that embrace the "essence of gracious living," which of the following would be the MOST likely result?
a. Kohler would feel pressure to expand its business to include a wider range of products and services.
b. Customers who had a positive experience with some of Kohler's products would be more interested in trying other Kohler products.
c. Kohler's divisions would be more likely to create their own individual mission statements.
d. Sales of higher-priced goods and services would increase less than sales of lower-priced goods and services.
e. Kohler's customers would be more likely to focus on price and less likely to focus on customer service.
What type of skills requires defining problems and selecting the best course of action to take?
a. human relations skills
b. production skills
c. conceptual skills
d. decision-making skills
e. technical skills
Which business constituents analyze their competitive environments and plan, organize, direct, and control the operations of their organizations?
a. Stockholders
b. Managers
c. Regulators
d. Agents
e. customers
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