Business Unit 2: Overview and CFO Roles

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Questions and Answers

What is one of the primary responsibilities of a Chief Financial Officer (CFO)?

Financial reporting (correct)

Product development

Customer service management

Market research

How can a CFO help in adapting to changing business environments?

By capitalizing on new opportunities (correct)

By avoiding any form of digital technology

By focusing exclusively on cost-cutting measures

By interpreting historical business trends only

What is a characteristic of a mixed economy?

No government intervention in the economy

Full privatization of all industries

Some allocation of resources by the market and some by government (correct)

Complete government control over resources

What does privatization involve with respect to crown corporations?

Selling crown corporations to reduce government’s role Signup and view all the answers

Which competency is NOT considered valuable for a CFO?

Exclusively traditional accounting skills Signup and view all the answers

What is a primary advantage of entering global markets?

Opportunity to expand customer base Signup and view all the answers

Which of the following is NOT a strategy to enter global markets?

Retail Expansion Signup and view all the answers

Which method of entering global markets allows for the least commitment and risk?

Licensing Signup and view all the answers

What role does the Canada Border Service Agency (CBSA) play in imports?

They monitor imports to ensure compliance with safety standards. Signup and view all the answers

Why might small businesses be more effective in foreign markets compared to multinational corporations?

They are quicker to react to market changes. Signup and view all the answers

What is the primary goal of free trade?

To trade without political or economic obstruction Signup and view all the answers

How does comparative advantage affect international trade?

It leads countries to export what they produce most efficiently. Signup and view all the answers

What is a consequence of trade protectionism?

It limits the variety of products available to consumers. Signup and view all the answers

Which agreement removed 98% of tariffs between Canada and the EU?

CETA Signup and view all the answers

What is a common outcome of trade agreements like NAFTA?

Improved working conditions and fair competition. Signup and view all the answers

What do tariffs specifically refer to in trade?

Taxes on imported goods. Signup and view all the answers

What is the purpose of an import quota?

To protect domestic products by restricting the quantity of imports. Signup and view all the answers

Which of the following is NOT considered a trade barrier?

Enhancing comparative advantage Signup and view all the answers

What is a significant drawback of licensing as a business strategy?

Loss of trade secrets Signup and view all the answers

Which of the following describes franchising?

Licensing rights to use a business name Signup and view all the answers

What advantage does contract manufacturing provide?

Testing new markets with lower costs Signup and view all the answers

Which of the following is a key benefit of a joint venture?

Shared resources and expertise Signup and view all the answers

What characterizes a strategic alliance?

A long-term partnership without shared risks Signup and view all the answers

What is one of the challenges of foreign direct investment (FDI)?

Compliance with multiple regulations Signup and view all the answers

What is a potential risk associated with exporting?

Difficulty in finding global customers Signup and view all the answers

Why do local governments encourage foreign investment?

To enhance local job creation Signup and view all the answers

What is a common reason for small business failure related to financial management?

Starting with too much capital without care Signup and view all the answers

Which critical element of business management focuses on understanding customer preferences?

Understanding your Customers Signup and view all the answers

What can be a consequence of failing to complete accurate records in a business?

Poor decision-making Signup and view all the answers

Which factor does NOT contribute to small business failure?

Careful financial planning Signup and view all the answers

What is the primary advantage of globalization for consumers?

Increased options available Signup and view all the answers

Which statement best describes the relationship between importing and exporting?

They work together to create a balance of trade. Signup and view all the answers

What is one important action businesses should take when borrowing money?

Plan how and when to repay it Signup and view all the answers

What problem does a business face when it mistakes independence with freedom?

Poor financial management Signup and view all the answers

Why might small businesses need to appeal to foreign markets?

To increase global connectivity Signup and view all the answers

Which of the following is NOT a critical element of business management?

Social Networking Signup and view all the answers

What is the primary advantage of small businesses in Canada to the economy?

They represent 98% of employer businesses. Signup and view all the answers

Which of the following is a disadvantage associated with sole proprietorships?

Unlimited liability. Signup and view all the answers

What is a key characteristic of partnerships?

Based on a partnership agreement. Signup and view all the answers

Why do businesses that are easier to start often face higher failure rates?

They tend to have greater competition in the marketplace. Signup and view all the answers

What is a significant advantage of corporations compared to sole proprietorships?

Limited liability for owners. Signup and view all the answers

What is one of the outcomes of increased competition brought by businesses like Air Canada?

Improved efficiencies and reduced costs for consumers. Signup and view all the answers

Which is a common characteristic of small businesses in Canada?

They usually have 1 to 99 employees. Signup and view all the answers

What does the term 'unlimited liability' imply for sole proprietors?

They are fully responsible for business debts. Signup and view all the answers

How does having a corporation affect business continuity?

Corporations have indefinite life. Signup and view all the answers

What factor contributes to the success of businesses that are harder to start?

Lower competition due to barriers to entry. Signup and view all the answers

Which of the following is NOT an advantage of partnerships?

Unlimited liability among partners. Signup and view all the answers

What is a common reason businesses fail after easily entering the market?

They lack innovation due to market saturation. Signup and view all the answers

What distinguishes a corporation from a sole proprietorship?

A corporation is a separate legal entity. Signup and view all the answers

Which of the following best describes the concept of business continuity?

The ability of a business to operate indefinitely. Signup and view all the answers

Study Notes

Unit 2: Overview of Business

Understanding Business as a Financial Leader:
- Chief Financial Officer (CFO) responsibilities: Financial reporting, control, compliance, operations, human resources, information technology (e.g., digitization, cybersecurity)
- Emphasize business understanding for better decision-making in adapting to changing business environments
- Importance of understanding changing trends and anticipating future developments to capitalize on opportunities
- Expected to help align activities with company strategy for value, innovation, and growth

Introduction to Business

Business is an activity intended for profit
Challenges of Canadian business: large land, low population density, infrastructure gaps, tariffs with the US to protect Canadian businesses
Canada's mixed economy: some resources allocated by the market and some by various levels of government
Crown Corporations: federally or provincially government-owned/operated companies (e.g., CBC)
Privatization of some businesses.

Reducing the Role of Government

Reducing the role of government through the sale of crown corporations (e.g., Air Canada)
Reducing government debt, increasing competition, and improving efficiencies and reducing costs for consumers
Emphasis on the importance of small businesses (98-99% of employers)
Significance of small business to the Canadian workforce (70%).

Forms of Business Ownership

Sole Proprietorship: Owned and operated by one person.
- Advantages: easy setup, low start-up costs, freedom for owner
Partnership: A partnership agreement that outlines the business's nature, financial contributions, how profits are shared, decision-making process, dispute resolution, and partnership termination.
- Advantages: easy setup, shared start-up costs, shared management, less regulatory requirements
Corporation: A separate legal entity with an unlimited number of owners.
- Advantages: limited liability, business continuity, and possible tax advantages
- Disadvantages: higher start-up costs, more complex regulatory requirements to manage records

Learning from Failure: Why Small Businesses Fail

Factors contributing to small business failures:
- Easy entry to the marketplace leads to greater competition and lower prices
- Difficulties in charging competitive prices for businesses that are harder to start due to lower supply
- Insufficient research and planning
- Insufficient capital (too little or too much)
- Lack of knowledge or experience
- Poor financial management
Importance of testing and refining business models

Going into Business

Starting a business with limited knowledge about market/industry
Not planning for unexpected expenses
Not maintaining accurate records
Habits of personal extravagance affecting business
Confusion between freedom and liberty in business
Importance of good business planning and strategy.

Impact of Globalization on Stakeholders

Benefits of globalization to businesses: more options, global connections with customers, clients or partners, potential global sourcing of resources and marketing more options
Small businesses having potential to reach more customers with access to internet and technology
Large companies outsourcing
Every country's different resources, environmental conditions, populations, knowledge, and expertise
Exporting and Importing: advantages of each
Trade surplus/deficit: Relationship between imports and exports
Free Trade: benefits of mutually beneficial trade without political/economic obstacles

Challenges

Each country wants to maximize revenues and protect workers, leading to trade barriers and potential greater bargaining power
Importance of comparative advantage (exporting what is produced effectively)
Theory of comparative advantage is prevented by governments protecting domestic industries
Free Trade and the flow of goods from one country to another
Trade Agreements (CETA, NAFTA): Agreements that support trade, such as removing tariffs, but may raise issues for specific industries.
Understanding trade protectionism: tariffs, import quotas, embargoes.

Entering Global Markets: Canada's Perspectives

Expanding customer base, additional profit potential from entering global markets
Costs and risks of entering global markets
Selling directly to international customers vs intermediaries (e.g., foreign distributors)
Small businesses can tailor products to meet customer needs in global markets.
MNCs manufacturing products in countries where they have physical presence.

Strategies to Enter Global Markets

Licensing (least commitment; foreign company makes your products)
Exporting (selling products to another country)
Franchising (selling the rights to use a business name and service)
Contract Manufacturing (outsourcing production)
Joint Venture (partnership of 2 or more companies to start a project)
Advantages and disadvantages of different strategies.

Foreign Direct Investment (FDI)

Benefits of FDI: Jobs, revenue, knowledge and technology transfer to local communities and country
Challenges of FDI: Regulations, legal considerations, political instability in host country, maintaining local control over resources, competition from other businesses
Governments' role: encouraging FDI (jobs, revenue)
Criticism of FDI: profit going to home country, potential lack of local innovation, possible conflict with local community interests

Future Opportunities and Challenges

Potential of emerging markets for Canadian businesses (e.g., BRICS nations)
Importance of building and cultivating relationships with other businesses

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Description

This quiz explores the overview of business concepts, focusing on the role of a Chief Financial Officer (CFO) and the various responsibilities involved in financial leadership. It also highlights the unique challenges faced by Canadian businesses and the mixed economic structure of the country. Test your understanding of these key concepts to enhance your business acumen.