Business Ownership Chapter 4

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What is the primary function of a board of directors in a corporation?

To implement the chosen strategy and direct the work of the corporation

To elect corporate officers

To set corporate management and oversight policies (correct)

To manage the day-to-day operations of the corporation

Who is responsible for electing the members of a board of directors?

Corporate officers

Outside directors

Inside directors

Shareholders (correct)

What is the difference between inside directors and outside directors?

Inside directors are top managers from within the corporation, while outside directors are experienced managers from outside the corporation (correct)

Inside directors are elected by the board, while outside directors are elected by corporate officers

Inside directors are responsible for setting corporate goals, while outside directors are responsible for implementing the chosen strategy

Inside directors are elected by shareholders, while outside directors are appointed by the board

What is the role of corporate officers in a corporation?

To implement the chosen strategy and direct the work of the corporation Signup and view all the answers

Why is it necessary for every public company to have a board of directors?

To provide representation for shareholders Signup and view all the answers

What is the primary responsibility of the board of directors in terms of corporate goals?

To develop strategic plans to meet the corporate goals Signup and view all the answers

What is the primary characteristic of a sole proprietorship?

It is owned by one person Signup and view all the answers

What is the main advantage of a sole proprietorship over other forms of business ownership?

It is easier to start Signup and view all the answers

What is the purpose of a partnership agreement?

To define the relationship between partners Signup and view all the answers

What type of partner contributes capital to a business but has no management responsibility or liability for losses beyond the amount invested?

Limited partner Signup and view all the answers

What is a unique feature of S-corporations?

They have special tax benefits Signup and view all the answers

What is the primary purpose of a cooperative?

To provide a service to its members Signup and view all the answers

What is the primary difference between a master limited partnership and a corporation?

How it is taxed Signup and view all the answers

What is a key difference between growth from within and growth through mergers?

Growth from within is organic, while growth through mergers is external Signup and view all the answers

What is the purpose of an articles of partnership agreement?

To outline the terms of a partnership, including duties and investments Signup and view all the answers

How are the profits and losses of a partnership typically divided?

As outlined in the articles of partnership agreement Signup and view all the answers

What is the benefit of having a written articles of partnership agreement?

It provides a clear outline of the partnership terms Signup and view all the answers

What is the primary characteristic of a general partner in a partnership?

They manage the business Signup and view all the answers

What is a characteristic of a horizontal merger?

The firms make and sell similar products Signup and view all the answers

What is the main purpose of federal agencies reviewing mergers?

To protect competition Signup and view all the answers

What is a characteristic of a vertical merger?

One firm is a supplier or customer of the other Signup and view all the answers

According to takeover advocates, what is a result of takeovers?

Companies become more profitable and productive Signup and view all the answers

What is a criticism of takeovers according to takeover opponents?

They force managers to focus on defense rather than vital business activities Signup and view all the answers

Why do financially secure firms engage in mergers and acquisitions during an economic crisis?

To take over firms in financial trouble Signup and view all the answers

What is the primary purpose of a franchise agreement?

To distribute recognized goods and services through a legal agreement Signup and view all the answers

What is the term for a franchise that operates within another store's facilities?

Piggyback Franchising Signup and view all the answers

What is the role of a franchisor in a franchise agreement?

To own the name and/or system that is being distributed through a licensing arrangement Signup and view all the answers

What is the term for the person who buys the right to sell goods or services of a parent company?

Franchisee Signup and view all the answers

What is the main goal of franchising?