CH 04

Schermerhorn & Bachrach / Management, 13th edition Test Bank
Chapter 4: Environment, Innovation, and Sustainability
True/False
1. The general environment comprises the actual organizations, groups, and persons with
whom an organization interacts and conducts business.
Answer: False
Learning Objective: 4.1
Difficulty: Easy
AACSB: Analytical thinking
Bloom’s Taxonomy: Knowledge
2. Offshoring is the return of jobs from foreign locations as companies establish new
domestic operations.
Answer: False
Difficulty: Easy
3. Rising labor costs, higher shipping costs, and public criticisms about destroying local
jobs can cause global firms to return to their home countries.
Answer: True
Difficulty: Easy
4. The legal-political conditions in the global business environment are uniform across all
countries.
Copyright © 2015 John Wiley & Sons, Inc. 4-1

Answer: False
Difficulty: Easy
5. Internet censorship is the deliberate blockage and denial of public access to information
posted on the Internet.
Answer: True
Difficulty: Easy
6. Inflation, income levels, and job outlook are part of the sociocultural conditions in the
general environment.
Answer: False
Difficulty: Easy
7. Generational cohorts consist of people born within a few years of one another and who
experience somewhat similar life events during their formative years.
Answer: True
Difficulty: Easy
8. The baby boomers are “digital natives” who grew up in technology-enriched homes,
schools, and friendship environments.
Answer: False

Difficulty: Easy
9. The millennials are characterized with the ease of multitasking, desire for immediate
gratification, continuous contact with others, and less concern with knowing things than
with knowing where to find out about things.
Answer: True
Difficulty: Easy
10. A sustainable business both meets the needs of customers and protects the natural
environment for future generations.
Answer: True
Difficulty: Easy
11. Sustainable business practices generate substantial amounts of waste and toxic
materials.
Answer: False
Difficulty: Easy
12. Stakeholders are the persons, groups, and institutions directly affected by an
organization.
Answer: True


Difficulty: Easy
13. Competitive advantage is something that an organization does extremely well, that can
be copied by its competitors, and help them gain an advantage.
Answer: False
Difficulty: Easy
14. Risk taking is a way to step forward and try new things.
Answer: True
Difficulty: Easy
15. Competitive advantage can be achieved through quality by finding ways and using
technology to create products and services that are of consistently higher quality for
customers than what is offered by one’s competitors.
Answer: True
Difficulty: Easy
16. Competitive advantage achieved through costs will help an organization earn profits
with prices that one’s competitors have difficulty matching.
Answer: True


Difficulty: Easy
17. The more uncertain the environment, the easier it is to analyze environmental
conditions and predict future states of affairs.
Answer: False
Difficulty: Easy
18. The number of different factors in the environment is referred to as the rate of change.
Answer: False
Difficulty: Moderate
19. The least challenging and certain situation is an environment of organizations that is
both complex and dynamic.
Answer: False
20. High-uncertainty environments require an ability of decision makers to respond quickly

as new circumstances arise and new information becomes available.
Answer: True

Difficulty: Easy
21. Innovation is a low priority when executives and leaders try to steer organizations
through complex and uncertain environments.
Answer: False
22. Product innovations result in better ways of doing things.
Answer: False
Difficulty: Easy
23. Business model innovations result in new ways of making money for the firm.
Answer: True
Difficulty: Easy
24. The initial step of assessing in the innovation process involves commercializing
innovation by turning it into actual products, services, or processes that increase profits
by improving sales or lowering costs.
Answer: False
Difficulty: Easy


25. The concept of reverse innovation got its start as global firms moved away from
viewing innovation as a “home market” activity that creates new products and services
for distribution to “foreign markets.”
Answer: True
26. Environmental capital is the supply of natural resources that we use to sustain life and
produce goods and services for society.
Answer: True
Difficulty: Easy
27. The executives of Dunes Inc. pay equal attention toward maximizing profits of the firm,
maintaining the well-being of its employees, satisfying its customers, and preserving the
environment. This indicates that Dunes Inc. uses the triple bottom line approach.
Answer: True
AACSB: Application of knowledge
Bloom’s Taxonomy: Application
28. An organization that does not provide health insurance to employees can be categorized
as one with poor human sustainability.
Answer: True


29. Pfeffer’s concern on human sustainability focusses on the importance of employees as

they are organizational stakeholders.
Answer: True
Difficulty: Easy
Multiple Choice
30. _____ environment consists of economic, legal-political, sociocultural, technological,

and natural environment conditions.
A. Specific
B. Task
C. General
D. Stakeholder
E. Customer
Answer: C
Difficulty: Easy
31. Which of the following represents the economic conditions in the general environment?
A. Patents
B. Infrastructure
C. Internet access
D. Unemployment rate
E. Norms

Answer: D
Difficulty: Easy
32. A country faced severe recession that resulted in loss of jobs and low income levels,
which in turn affected the lifestyles of the consumers. Which of the following
conditions are influencing the environment of the country?
A. Political conditions
B. Legal conditions
C. Technological conditions
D. Sociocultural conditions
E. Economic conditions
Answer: E
33. Which of the following involves outsourcing of jobs to foreign locations?

A. Reshoring
B. Offshoring
C. Repatriation
D. Nationalization
E. Backshoring
Answer: B
Difficulty: Easy
34. Which of the following is a criterion of a good economic condition in the general
environment?
A. The rising income inequality among the working class

B. The low unemployment rate in the society

C. The introduction of new developments in the technological areas
D. The introduction of carbon neutral methods for sustainable development
E. The occurrence of long-term joblessness among the people of the society
Answer: B
Bloom’s Taxonomy: Comprehension
35. Adams Inc., an automobile corporation based in London, shifts its manufacturing
activities to China in order to minimize its cost of production. Which strategy has is
Adams Inc. adopted here?
A. Repatriation
B. Nationalization
C. Backshoring
D. Offshoring
E. Reshoring
Answer: D
36. Which of the following would qualify as a reason for reshoring?

A. Low costs in the target country
B. Complicated logistics in the target country
C. Excellent customer service in the target country
D. Low shipping costs in the target country
E. Low labor costs in the target country
Answer: B
Difficulty: Easy

37. Techni Asset, a software corporation based in the United States, used to operate from
several countries with lower labor costs. When the firm started to incur high costs of
production in the foreign countries and received complaints and criticisms about the
loss of local jobs, the firm decided to return to its home country. This change made to
the firm’s global strategy is an example of _____.
A. offshoring
B. outsourcing
C. nationalization
D. privatization
E. reshoring
Answer: E
38. The patent attorney of Rayon Inc. was accused of stealing the organization’s invention.
This scenario is an example of the _____ conditions of the general environment.
A. natural
B. legal-political
C. technological
D. sociocultural
E. educational
Answer: B
Difficulty: Easy
39. The government of Floraine imposes certain rules and regulations regarding the interest
rates and other transactions for its financial institutions. This is an example of the _____
conditions of the general environment.
A. natural
B. technological
C. sociocultural
D. legal-political
E. educational

Answer: D
Difficulty: Easy
40. Which of the following examples illustrates the legal-political conditions in the general
environment?
A. Bureaucratic decisions made in a nation
B. Financial market situation existing in a nation
C. Health and Nutritional values of a nation
D. Information technology systems or infrastructure of a nation
E. Population demographics of a nation
Answer: A
41. Crayons Inc., a media corporation headquartered in California, has its operations across
different nations. The activities of the firm are affected by the government policies and
the ideologies of the legislative institutions existing in the host countries. Which of the
following factors are affecting the firm’s operations?
A. Economic conditions
B. Sociocultural conditions
C. Legal-political conditions
D. Technological conditions
E. Natural environment conditions
Answer: C

42. Which of the following is a part of the sociocultural conditions in the general
environment?
A. Inflation
B. Financial markets
C. Government policies
D. Intellectual properties
E. Demographics
Answer: E
Difficulty: Easy
43. Diversity issues relating to educational opportunity, access to technology, housing

options, and so on are parts of the _____ conditions in the general environment.
A. economic
B. legal
C. technological
D. sociocultural
E. political
Answer: D
Difficulty: Easy
44. The managers of Vortex Inc. stresses the importance of team norms, business ethics,
and respect for human rights in the organization. This implies that the organization is
working on the _____ conditions in the organizational environment.
A. economic
B. legal
C. sociocultural
D. technological
E. political
Answer: C
Difficulty: Hard


45. The marketing executives of Exphyne Inc. observes the demographics of the population
at its different areas of operation. They work towards satisfying the needs and
preferences of individuals belonging to various demographic groups. The factors that
they analyze include age, ethnicity, income levels, and gender. This implies that
Exphyne Inc. focuses on the _____ conditions in the general environment to make sales.
A. technological
B. legal
C. philosophical
D. sociocultural
E. political
Answer: D
Difficulty: Hard
46. Which of the following aspects of demographics comprises of generational cohorts?

A. Income levels
B. Race
C. Age
D. Ethnicity
E. Gender
Answer: C
Difficulty: Easy
47. _____ are “digital immigrants” who have had to learn about technology as it became
available.
A. Baby Boomers
B. Gen Ys
C. Gen Xs

D. Millennials
E. Gen Zs
Answer: A
Difficulty: Easy
48. Which of the following are characterized by ease of multitasking, desire for immediate
gratification, continuous contact with others, and less concern with knowing things than
with knowing where to find out about things?
A. Millennials
B. Gen Xs
C. Baby Busters
D. Golden Boomers
E. Baby Boomers
Answer: A
Difficulty: Easy
49. Vane has the ability to multitask and maintain continuous contact with others. She
believes in receiving immediate gratification. This implies that Vane is most likely a
_____.
A. Baby Boomer
B. Millennial
C. Gen X
D. Baby Buster
E. Golden Boomer
Answer: B

50. Finheat, a financial services organization, advertises its financial products and
instruments on social networking sites and other Websites. This implies that the firm is
utilizing the _____ conditions in the general environment.
A. natural
B. legal
C. technological
D. sociocultural
E. political
Answer: C
Difficulty: Hard
51. Jamie has a diverse collection of the latest video games. He also owns a mobile phone
with a number of applications. His school is well equipped with Internet facilities.
Which of the following generational cohorts does Jamie most likely belong to?
A. Baby Boomer Generation
B. Gen X Generation
C. Baby Buster Generation
D. Millennial Generation
E. Golden Boomer Generation
Answer: D
Difficulty: Hard
52. InGen Inc. implements the use of social media, digital sharing of presentations, data,
files, and holds regular virtual meetings. This indicates that the firm has reasonably
well-equipped _____ conditions in the organizational environment.
A. natural
B. technological
C. legal
D. sociocultural
E. political

Answer: B
Difficulty: Hard
53. Which of the following examples illustrates the technological conditions in the general
environment?
A. Features and applications available on an individual’s phone
B. Income levels of an individual
C. Housing options for an individual
D. Job options for an individual
E. Educational opportunities for an individual
Answer: A
54. Which of the following examples would qualify as a potential problem of the existing
ever-present technological condition?
A. An organization advertising its products on social networking websites
B. An organization’s employees regularly engaging in online pastimes during work hours
C. An organization conducting regular virtual meetings with its clients
D. A musician promoting his debut musical project through media websites
E. An organization implementing digital sharing of files, presentations, and projects
Answer: B
Difficulty: Hard
55. A sustainable business:

A. is involved in risk-taking from position of performance difficulty.
B. has lack of information regarding what exists in the business environment and what
developments may occur.

C. creates products or services that become so widely used that they largely replace prior
practices and competitors.
D. meets the needs of customers as well as protects the natural environment for future
generations.
E. is an organization motivated by desperation to escape existing difficulties.
Answer: D
56. The _____ environment includes the people and groups with whom an organization
interacts.
A. general
B. natural
C. specific
D. macro
E. external
Answer: C
Difficulty: Easy
57. Stakeholders:
A. are described as employees who move to foreign locations to reduce costs to the
organization.
B. are individuals who propose laws and regulations, government policies, and the
philosophy and objectives of political parties.
C. are owners of organizations who take risks motivated by desperation to get out of bad
situations.
D. refer to the employees who return from different host countries and help in establishing
new domestic operations.
E. are the persons, groups, and institutions directly affected by an organization.
Answer: E
Difficulty: Easy


58. Which of the following is true of stakeholders?

A. Members of the specific or task environment are often described as stakeholders.
B. Stakeholders are influenced by their stakes, but they are not allowed to influence it in
return.
C. An organization’s performance does not affect the stakeholders.
D. All stakeholders belong to the generational cohort of Baby Boomers.
E. All stakeholders are “digital natives” who grew up in technology-enriched homes,
schools, and friendship environments.
Answer: A
Difficulty: Easy
59. Which of the following falls on the positive side of risk-taking behavior of
organizations?
A. Risk taking from position of performance difficulty
B. Risk taking motivated by desperation to get out of bad situation
C. Risk taking from hard time dealing with problems without losing focus
D. Risk taking with the ability to deal with problems as they arise
E. Risk taking from little staying power
Answer: D
60. Which of the following is true of value creation by businesses?

A. Businesses create value for customers through realized profits and losses.
B. Businesses create value for employees by wages earned and job satisfaction.
C. Businesses create value for competitors through the benefits of long-term business
relationships.
D. Businesses create value for suppliers by the citizenship they display.

E. Businesses create value for local communities by stimulating markets and innovations
that didn’t exist before.
Answer: B
Difficulty: Easy
61. Four Rollers Corp., an automobile company, benefits by spending less than its
competitors on labor, operations, promotions, and features offered. This enables the
firm to charge relatively lower prices on its goods from its customers. Which of the
following is a competitive advantage of the firm?
A. High quality
B. Low costs
C. Flexibility
D. Delivery
E. Adaptability
Answer: B
62. Which of the following examples illustrates a firm that has achieved competitive
advantage through costs?
A. A firm that uses patented technology to deliver goods and services to customers on time
B. A firm’s ability to adjust and adapt to different demographic segments and satisfy their
needs
C. A firm that invests only a small amount on promotion and maximizes profits by
charging low prices
D. A firm’s technology that creates high quality products and services
E. A firm that specializes in developing timely new products
Answer: C

63. Linkage Communications produces mobile phones, smart phones, and laptops. In terms
of longevity and user-friendliness, the firm’s products are rated the best. Additionally, it
offers applications and features with the latest technology. Which of the following has
enabled Linkage Communications to achieve a competitive advantage over its
competitors?
A. Quality
B. Costs
C. Flexibility
D. Delivery
E. Adaptability
Answer: A
64. Which of the following examples illustrates a firm that has achieved competitive
advantage through technology?
A. A firm that invests less on its production processes
B. A firm that focuses on producing zero defect products
C. A firm that uses patented expertise in developing a nuanced product
D. A firm that spends very less on advertising and promotional costs
E. A firm that caters to only a selected few customer needs
Answer: B
65. Which of the following examples displays a firm with a competitive advantage
achieved through quality?
A. An organization that is famous for its durable products
B. A corporation that reduces its expenses by finding new production processes
C. A firm that delivers goods and services faster than its competitors
D. An organization that gains profits by charging less prices

E. A company that tailors its goods and services to fit consumer needs and preferences
Answer: A
66. The Oomph Factor, an online retail firm, owns a patented technology that ensures that
its goods and services reach customers on time. The firm also has the ability to develop
timely new products. The firm has gained competitive advantage through _____.
A. quality
B. costs
C. flexibility
D. delivery
E. adaptability
Answer: D
67. Which of the following illustrates a firm that has achieved competitive advantage
through delivery?
A. A firm that uses technology to produce durable products
B. A firm that develops timely new products
C. A firm that has the flexibility to operate successfully in any business environment
D. A firm that makes small financial investments at the time of production
E. A firm that can adapt and change according to the needs of different customers
Answer: B

68. Which of the following illustrates a firm that has achieved competitive advantage
through flexibility?
A. A firm that creates customized products based on each of its customer’s preferences
B. A firm that produces goods by maintaining high quality standards
C. A firm that ensures speedy delivery of goods compared to its competitors
D. A firm that develops products with unique features that are not made available by any
of its competitors
E. A firm that develops timely new products
Answer: A
69. Competitive advantage can be achieved through _____ by finding ways and using
technology to adjust and tailor products and services to fit customer needs in ways that
are difficult for one’s competitor to match.
A. quality
B. costs
C. flexibility
D. delivery
E. durability
Answer: C
Difficulty: Easy
70. Which of the following is true of environmental uncertainty?

A. The less uncertain the environment, the harder it is to analyze environmental conditions
and predict the future state of affairs.
B. The least challenging situation is an environment that is both complex and dynamic.
C. High-uncertainty environments require less flexibility in organizational designs and
work practices as different circumstances arise every now and then.
D. High-uncertainty environments require people to make decisions gradually since new
circumstances arise constantly.
E. The uncertainty of an organization can be analyzed using degree of complexity and rate
of change.

Answer: E
71. Innovation refers to the:

A. lack of information regarding what exists in the environment.
B. people and groups with whom an organization interacts.
C. process of taking a new idea and putting it into practice.
D. return of jobs from foreign locations as companies establish new domestic operations.
E. things that an organization does extremely well and that gives it an advantage.
Answer: C
72. Brazen Inc. introduced a new line of deodorized clothes produced with natural
ingredients such as flowers and fruits, to reduce the impact of the environmental
hazards caused by the production of deodorants. This implies that Brazen Inc. was
engaging in _____.
A. process innovation
B. business model innovation
C. product innovation
D. skimming
E. performance innovation
Answer: C
Difficulty: Hard
73. Which of the following is an example of a product innovation?

A. A firm launching a new flavor to its existing range of candies

B. A firm allowing customers to mail the desired designs of goods

C. A firm introducing a new online shopping model
D. A firm introducing new technology to ease the installation process
E. A firm changing its line of business from manufacturing automobiles to producing
music
Answer: A
74. Footlore Inc. introduced a sophisticated new range of shoes that prevents any type of
injury to the wearer’s feet. This is an example of a:
A. process innovation.
B. product innovation.
C. business model innovation.
D. social business innovation.
E. paradigm innovation.
Answer: B
75. Which of the following forms of innovation focuses on better ways of doing things?
A. Product innovation
B. Process innovation
C. Business model innovation
D. Social business innovation
E. Paradigm innovation
Answer: B
Difficulty: Easy

76. Which of the following is an example of a process innovation?

A. A firm putting coupons on the Web
B. A firm introducing a new social media site
C. A firm introducing “ready to assemble” furniture
D. A firm converting the movie rental business into a subscription business
E. A firm creating the world’s largest online marketplace
Answer: C
77. Eureka Electronics Inc. offers computer programs and software programs including
software drivers and plug-ins that can be self-installed easily. The firm’s introduction of
programs that can be self-installed is an example of _____ innovation.
A. product
B. process
C. business model
D. reverse
E. social business
Answer: B
Difficulty: Hard
78. Which of the following scenarios best describes a process innovation?

A. A firm launching a new car model with basic features and systems
B. A restaurant where customers are allowed order dishes after taking a sample
C. A footwear manufacturer introducing a unique range of shoes
D. A firm introducing a new software to protect computers from viruses
E. A firm changing its line of business from manufacturing eyewear to producing watches
Answer: B

79. A business model innovation results in:

A. new ways for firms to make money.
B. better ways of doing things.
C. introduction of new or improved goods.
D. the creation of new services.
E. environmental uncertainty.
Answer: A
Difficulty: Easy
80. Celluloid Inc., a photography firm, entered into other activities such as cinematography,
advertisement creations, and short-film making, to make more money for the firm. This
implies that Celluloid Inc. had engaged in a _____ innovation.
A. product
B. process
C. business model
D. reverse
E. pricing
Answer: C
Difficulty: Hard
81. Which of the following is an example of a business model innovation?

A. A firm introducing a new model of its smartphone
B. A firm introducing “ready to install” software
C. A firm introducing a range of meals that can be cooked instantly
D. A firm introducing its new range of accessories to go with its clothesline
E. A firm introducing a new social networking website to connect with its customers
Answer: D


82. Garsynth Corporation specializes in preparing eco-friendly products out of solid waste,
old newspapers, and waste plastic. The firm employs individuals belonging to the
weaker economic sections of the city. The company has engaged in _____ innovation.
A. product
B. red ocean
C. reverse
D. breakthrough
E. social business
Answer: E
Difficulty: Hard
83. Which of the following is an example of a social business innovation?

A. An organization working on maintaining cleanliness in the cities
B. A firm specializing in producing customized bags based on preferences of the
purchasers
C. A firm introducing a range of meals that can be cooked instantly
D. A firm removing the use of intermediaries to deal with customers directly
E. A record label using an exclusive process to record music albums
Answer: A
84. Microcredit lending is an example of _____ innovation.

A. reverse
B. social business
C. disruptive

D. environmental
E. green
Answer: B
Difficulty: Easy
85. Which of the following steps in the innovation process involves thinking about new
possibilities?
A. Imagining
B. Experimenting
C. Assessing
D. Designing
E. Scaling
Answer: A
Difficulty: Easy
86. Which of the following steps in the innovation process involves building initial models,
prototypes, or samples?
A. Imagining
B. Experimenting
C. Assessing
D. Designing
E. Scaling
Answer: D
Difficulty: Easy

87. A group of employees of Smithson Inc., a software firm, were analyzing the practicality
and feasibility of a software program by releasing a few samples of the program on the
Internet for a month. Which of the following steps of the innovation process were the
employees engaging themselves in?
A. Imagining
B. Experimenting
C. Assessing
D. Designing
E. Scaling
Answer: B
Difficulty: Hard
88. Red Sun Inc., an automobile manufacturer, developed a new car model. The firm
worked on identifying the strengths and weaknesses of the new model, the costs that
would be incurred in its manufacture, and its target markets. Which of the following
steps of the innovation process was the firm involved in?
A. Imagining
B. Experimenting
C. Assessing
D. Designing
E. Scaling
Answer: C
Difficulty: Hard
89. Which of the following steps in the innovation process consists of implementing what
has been learned and commercializing new products or services?
A. Scaling
B. Experimenting
C. Assessing
D. Designing
E. Imagining

Answer: A
Difficulty: Easy
90. Animo Inc., a firm that specializes in animation, released its latest patented animation
software in the market to increase its profits by improving sales. Which of the following
steps of the innovation process was executed by the firm?
A. Imagining
B. Experimenting
C. Assessing
D. Designing
E. Scaling
Answer: E
Difficulty: Hard
91. Which of the following is the final step wheel of innovation?

A. Imagining
B. Experimenting
C. Assessing
D. Designing
E. Scaling
Answer: E
92. Which of the following is true of reverse innovation?

A. It taps the potential for innovation existing at higher organizational levels.
B. It emphasizes recognition of innovations developed in well-established markets.
C. It recognizes innovations existing in diverse settings or locations.

D. It involves a lack of complete information regarding what exists in the environment.

E. It focuses on identifying strengths and weaknesses, and potential costs and benefits.
Answer: C
Difficulty: Easy
93. Which of the following concepts got its start as global firms moved away from viewing
innovation as a “home market” activity that creates new products and services for
distribution to “foreign markets”?
A. Disruptive innovation
B. Product innovation
C. Reverse innovation
D. Incremental innovation
E. Social business innovation
Answer: C
Difficulty: Easy
94. _____ innovation pulls new products and services from settings, where they are often
created under pricing constraints, and pushes them into use elsewhere.
A. Disruptive
B. Reverse
C. Luxurious
D. Product
E. Business model
Answer: B
Difficulty: Easy

95. Which of the following creates products or services that become so widely used that
they largely replace prior practices and competitors?
B. Sustainability
C. Sustaining innovation
D. Transformational innovation
E. Incremental change
Answer: A
Difficulty: Easy
96. Rhapsody Inc. created a new line of cameras that work on solar energy. These solar
cameras reduced the demand for digital cameras and gradually replaced the use of
digital cameras and ended competition. Which of the following is prominent in this
instance?
A. Positioning innovation
B. Incremental change
C. Process improvement
D. Disruptive innovation
E. Process innovation
Answer: D
Difficulty: Hard
97. The commitment to protect the rights of present and future generations as co-
stakeholders of present-day natural resources is termed as _____.
A. disruptive innovation
B. sustainability
C. environmental uncertainty
D. reverse innovation
E. scaling
Answer: B

Difficulty: Easy
98. Which of the following is true of sustainability?

A. It is a lack of information regarding what exists in the environment and what
developments may occur.
B. It is a system by which an organization is directed or controlled.
C. It refers to the relationship between an organization’s management, its employees, its
stakeholders, and the government.
D. It is a commitment to live and work in ways that protect the rights of both the present
and the future generations.
E. It does not apply to the non-living things present on earth.
Answer: D
Difficulty: Easy
99. The process of using environmental resources to support societal needs today while also
preserving and protecting them for future generations is referred to as _____.
A. triple bottom line experiment
B. global warming
C. sustainable development
D. scaling
E. greenhouse effect
Answer: C
Difficulty: Easy
100. The supply of natural resources which sustain life and produce goods and services for
society is referred to as _____.
A. global warming
B. environmental capital

C. green innovation
D. triple bottom line
E. greenhouse effect
Answer: B
Difficulty: Easy
101. Which of the following holds true regarding sustainable businesses?

A. A sustainable business operates with nature by exploiting it.
B. A sustainable business strives for a win-lose outcome where the environment gains and
the organization loses.
C. A sustainable business creates products or services that become so widely used that they
result in the exhaustion of the resources.
D. A sustainable business can result in an environmental uncertainty.
E. A sustainable business works by meeting the needs of customers while advancing the
well-being of the natural environment.
Answer: E
Difficulty: Easy
102. Which of the following would qualify as one of the main goals of a sustainable
business?
A. Carbon reduction
B. Profit maximization
C. Global warming
D. Scaling
E. Greenhouse effect
Answer: A
Difficulty: Easy

103. Black Corporation focuses on providing maximum support to its employees as it

considers them its most important organizational stakeholders. The firm has a system of
flexible working hours to reduce the stress of employees and zero-day notice periods. It
permits employees to work from home through its virtual network. From this
information, it can be inferred that Black Corporation:
A. has a high rate of sustainable innovation.
B. focuses on the differences of generational cohorts.
C. highlights the importance of the triple bottom line.
D. has a high rate of human sustainability.
E. focusses on the ideals of environmental capital.
Answer: D
Difficulty: Hard
104. In a country, the web access through mobile devices doubled each year since 2009 and
during 2010, on an average, 2 million people used Facebook each day. Which of the
following environmental condition does this information portray?
A. Economic condition
B. Legal-political condition
C. Natural condition
D. Socio-cultural condition
E. Technological condition
Answer: E
105. The government of Klayoland introduces a new program whereby it initiated all its
business enterprises to adopt “green values”, and minimize and recycle its waste
disposal. Which of the following conditions has the government taken care of by this
decision?
A. Economic
B. Sociocultural

C. Political
D. Natural
E. Technological
Answer: D
106. Cufflinks, an outstanding house for tailored suits, has always had satisfied customers
owing to their ingenuity in facilitating top fashion trends. It is innovative in adapting to
changing vogues and demands of its customers.. Through which of the following ways
does Cufflinks gain a competitive advantage?
A. Costs
B. Flexibility
C. Delivery
D. Quantity
E. Profits
Answer: B
Difficulty: Hard
107. The R&D department of Meredith Inc., a tire manufacturing, discovers a new material
to be used as an alternative to rubber that brings down the manufacturing costs. This
allows the company to offer its products at a price lower than the market price. The
newly discovered material is the company’s:
A. disruptive innovation.
B competitive advantage.
C. natural capital.
D. environmental capital.
E. competitive environment.
Answer: B
Difficulty: Hard

108. Comtrot, a mobile application developer, outsourced the development of an application

to a cheaper location in another country. The application would notify users about their
blood pressures twice a week. The final product was marketed in the country of
Comtrot’s origin. Which of the following does this situation demonstrate?
B. Sustainability
C. Reverse innovation
D. Social business innovation
E. Process innovation
Answer: C
Difficulty: Hard
109. Pandemonium, a software enterprise, introduced a new gaming console in a small way
with stimulating features. In six months’ time its popularity and its sales increased
manifold. The major players in the business were overshadowed by this new gaming
console. Which of the following best describes this situation?
A. Environmental capital
B. Sustainable development
C. Sustainable innovation
D. Reverse innovation
E. Disruptive innovation
Answer: E
Difficulty: Hard
110. Fredrick comes up with an innovative range of watches. He has built a prototype and
has given it to his friends for checking its feasibility and examining its practical use.
According to the Hamel’s ‘wheel of innovation’, which of the following step has
Fredrick undertaken?

A. Assessment
B. Scaling
C. Imagining
D. Experimenting
E. Designing
Answer: E
Difficulty: Hard
111. Lewang has decided to launch an innovative product that would help the blind access
their mails through a voice application. He has finished designing the product and
accessing the costs and its market applicability. Keeping in mind Hamel’s “wheel of
Innovation”, what is the next step that Lewang should ideally undertake?
A. He should check for its sustainability.
B. He should initiate the process of scaling.
C. He should implement reverse innovation.
D. He should increase the price of the product.
E. He should access the rate of change in environment.
Answer: E
Difficulty: Hard
112. Food Chow, a grocery retail business, stopped the use of plastic bags and encouraged
the use of reusable bags. This indicates that the firm is practicing _____.
A. sustainable business
B. triple bottom line
C. scaffolding
D. competitive advantage
E. reverse innovation
Answer: A
Difficulty: Hard

113. Which of the following is an example of human sustainability?

A. Glenneth & Co., a pharmaceutical company, recruits employees on a temporary basis.
B. Margaret works every day for eleven hours as a receptionist in a law firm.
C. Carmel Works, a software company, provides ample health insurance coverage for its
employees as well as their dependents.
D. Preacher & Abel, a cosmetic company, cut down on the wages of its employees to reduce
cost of production.
E. Brent Inc. takes the initiative of planting trees across the town in which it operates.
Answer: C
Difficulty: Hard
Essay
114. Describe the most important aspects of each dynamic force that surrounds and
influences the general environment of an organization.
Answer: Things like the overall health of the economy in terms of financial markets,
inflation, income levels, and job outlook are important economic conditions in the
general environment. Legal-political conditions in the general environment are
represented by existing and proposed laws and regulations, government policies, and
the philosophy and objectives of political parties. Diversity issues relating to
educational opportunity, access to technology, housing options, job options, are part of
the sociocultural conditions in the general environment. The sociocultural conditions
also include norms, customs, and demographics of a society or region, as well as social
values on such matters as ethics, human rights, gender roles, and life styles. The
ongoing wave of technological conditions in the workplace ranges from new product
development and advertising to employee networking and data sharing to virtual
meetings and always-available chats. Natural environmental conditions include the
abundance of natural resources that the environment provides for organizations and
society, and the need to protect the availability of those resources for the future.
Difficulty: Easy


115. What are the dimensions of environmental uncertainty?
Answer: The first dimension of environmental uncertainty is the degree of complexity, or the
number of different factors in the environment. An environment is typically classified
as relatively simple or complex. The second is the rate of change in and among these
factors. An environment is typically classified as stable or dynamic. The most
challenging and uncertain situation is an environment that is both complex and
dynamic. High-uncertainty environments require flexibility and adaptability in
organizational designs and work practices, as well as an ability of decision makers to
respond quickly as new circumstances arise and new information becomes available.
116. What are the three types of innovation? What do they result in?
Answer: (1) Product innovations result in the creation of new or improved goods and
services. (2) Process innovations result in better ways of doing things. (3) Business
model innovations result in new ways of making money for the firm.
Difficulty: Easy
117. Describe the five steps of the wheel of innovation.
Answer: Gary Hamel describes the five steps in the wheel of innovation. Step 1 is
imagining—thinking about new possibilities. Step 2 is designing—building initial
models, prototypes, or samples. Step 3 is experimenting—examining practicality and
financial value through experiments and feasibility studies. Step 4 is assessing—
identifying strengths and weaknesses, potential costs and benefits, and potential markets
or applications. Step 5 is scaling—implementing what has been learned and
commercializing new products or services.

Difficulty: Easy

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Schermerhorn & Bachrach / Management, 13th edition Test Bank

Chapter 4: Environment, Innovation, and Sustainability

Copyright © 2015 John Wiley & Sons, Inc. 4-1

Copyright © 2015 John Wiley & Sons, Inc. 4-2

Copyright © 2015 John Wiley & Sons, Inc. 4-3

Learning Objective: 4.2

Copyright © 2015 John Wiley & Sons, Inc. 4-4

Learning Objective: 4.2

20. High-uncertainty environments require an ability of decision makers to respond quickly

Copyright © 2015 John Wiley & Sons, Inc. 4-5

22. Product innovations result in better ways of doing things.

Copyright © 2015 John Wiley & Sons, Inc. 4-6

AACSB: Analytical thinking

Copyright © 2015 John Wiley & Sons, Inc. 4-7

Learning Objective: 4.4

29. Pfeffer’s concern on human sustainability focusses on the importance of employees as

30. _____ environment consists of economic, legal-political, sociocultural, technological,

Copyright © 2015 John Wiley & Sons, Inc. 4-8

33. Which of the following involves outsourcing of jobs to foreign locations?

Copyright © 2015 John Wiley & Sons, Inc. 4-9

B. The low unemployment rate in the society

36. Which of the following would qualify as a reason for reshoring?

Copyright © 2015 John Wiley & Sons, Inc. 4-10

Copyright © 2015 John Wiley & Sons, Inc. 4-11

Copyright © 2015 John Wiley & Sons, Inc. 4-12

43. Diversity issues relating to educational opportunity, access to technology, housing

Copyright © 2015 John Wiley & Sons, Inc. 4-13

AACSB: Application of knowledge

46. Which of the following aspects of demographics comprises of generational cohorts?

Copyright © 2015 John Wiley & Sons, Inc. 4-14

Copyright © 2015 John Wiley & Sons, Inc. 4-15

Copyright © 2015 John Wiley & Sons, Inc. 4-16

55. A sustainable business:

Copyright © 2015 John Wiley & Sons, Inc. 4-17

Copyright © 2015 John Wiley & Sons, Inc. 4-18

AACSB: Analytical thinking

58. Which of the following is true of stakeholders?

60. Which of the following is true of value creation by businesses?

Copyright © 2015 John Wiley & Sons, Inc. 4-19

Copyright © 2015 John Wiley & Sons, Inc. 4-20

Copyright © 2015 John Wiley & Sons, Inc. 4-21

Copyright © 2015 John Wiley & Sons, Inc. 4-22

70. Which of the following is true of environmental uncertainty?

Copyright © 2015 John Wiley & Sons, Inc. 4-23

71. Innovation refers to the:

73. Which of the following is an example of a product innovation?

Copyright © 2015 John Wiley & Sons, Inc. 4-24

B. A firm allowing customers to mail the desired designs of goods

Copyright © 2015 John Wiley & Sons, Inc. 4-25

76. Which of the following is an example of a process innovation?

78. Which of the following scenarios best describes a process innovation?

Copyright © 2015 John Wiley & Sons, Inc. 4-26

Bloom’s Taxonomy: Application

79. A business model innovation results in:

81. Which of the following is an example of a business model innovation?

Copyright © 2015 John Wiley & Sons, Inc. 4-27

Learning Objective: 4.3

83. Which of the following is an example of a social business innovation?

84. Microcredit lending is an example of _____ innovation.