Chapter 06 Understanding Organizations As Customers Multiple Choice



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Chapter 06 Understanding Organizations As Customers

Multiple Choice
1. Fujitsu featured in the opening story of Chapter 6 __________.

a) sells electronics such as computers, semiconductors and mobile phones.

b) is an advertising agency for industrial companies that want brand recognition

c) is a provider of IT products and services

d) is a marketing research company that monitors e-commerce activities

e) buys and sells media space for newspapers

Ans: c


Feedback: Fujitsu is the world’s third largest and Japan’s largest provider of IT products and services.

Page: 155

Learning Objective: 1
2. Which one of the following is NOT characteristic of Fujitsu?

a) Profit responsibility

b) Societal responsibility

c) Stakeholder responsibility

d) Environmental responsibility

e) None

Ans: e


Feedback: Students will need to remember the definition of the various concepts of social responsibility in Chapter 4 to answer this question.

Page: 155-156

Learning Objective: 3
3. By adapting corporate socially responsible (CSR) procurement guidelines, which of the following concepts are Fujitsu applying?

a) Marketing concept

b) Product concept

c) Production concept



d) Societal marketing concept

e) Social audit

Ans: d

Feedback: Students will need to remember the various concepts in Chapter 1 to answer this question.



Page: 155

Learning Objective: 3

4. To select a supplier, Fujitsu looks at the supplier's capacity ability to deliver standardized parts on a Just-In-Time basis and requires them to optimize price and delivery. This examination would be done during their __________.

a) business correlation analysis

b) break-even analysis


c) value analysis

d) database search

e) reverse marketing

Ans: c


Feedback: A value analysis is the systematic appraisal of the design, quality and performance of a product to reduce purchasing costs.

Page: 155

Learning Objective: 3
5. __________ is the marketing of goods and services to companies, governments or not-for-profit organizations for use in the creation of goods and services that they can produce and market to others.

a) Relational marketing

b) Institutional marketing

c) Business marketing

d) Reseller marketing

e) Agricultural marketing

Ans: c


Page: 156

Learning Objective: 1


6. Manufacturers, wholesalers, retailers and government agencies that buy goods and services for their own use or for resale are __________.

a) multinationals

b) cooperatives

c) organizational buyers

d) ultimate consumers

e) multiculturals

Ans: c


Page: 156

Learning Objective: 1


7. Organizational buyers include all the buyers in a nation EXCEPT __________.

a) retailers

b) government

c) manufacturers

d) wholesalers

e) ultimate consumers

Ans: e


Feedback: Organizational buyers are those manufacturers, wholesalers, retailers and government agencies that buy goods and services for their own use or for resale.

Page: 156

Learning Objective: 1

8. Organizational buyers can be divided into three different markets. They are __________.

a) industrial, wholesaler and retailer

b) industrial, retailer and government

c) retailer, manufacturer and government agencies

d) industrial, government and ultimate consumer


e) industrial, reseller and government

Ans: e


Feedback: Organizational buyers are divided into three different markets: (1) industrial, (2) reseller and (3) government markets.

Page: 156

Learning Objective: 1
9. Which of the following statements represents an organizational buying decision?

a) The local baker buys sugar to make cookies with his children at home

b) A dentist buys a new VCR for her den

c) Mr. Langley hires a housecleaning service to clean his apartment



d) The owner of a fried chicken restaurant hires a snow removal service to keep the parking lot clear

e) A physician takes her sick child to the doctor

Ans: d

Feedback: Organizational buyers are those manufacturers, wholesalers, retailers and government agencies that buy goods and services for their own use or for resale. Organizational buyers include all buyers in a nation except ultimate consumers. Only the owner of a fried chicken restaurant is an organizational buyer; the other choices are ultimate consumers.



Page: 156

Learning Objective: 1


10. __________ buy raw materials and parts that they reprocess into the finished goods they sell.

a) Retailers

b) Wholesalers

c) Manufacturers' agents


d) Manufacturers

e) Ultimate consumers

Ans: d

Feedback: Manufacturers buy raw materials and parts that they reprocess into the finished goods they sell. Wholesalers and retailers resell finished goods without reprocessing them. Manufacturers' agents sell the finished goods for manufacturers without taking title to the goods. Ultimate consumers are the final users of the goods and services.


Page: 156

Learning Objective: 1


11. The business market is also called __________.

a) the transactional market

b) the ultimate market

c) a relational enterprise

d) entrepreneurship

e) the industrial market

Ans: e


Page: 157

Learning Objective: 1


12. Mining companies, farms, financial services and fisheries are all examples of __________.

a) multinationals

b) cooperatives

c) reseller markets



d) industrial markets

e) government markets

Ans: d

Feedback: Industrial (business) markets include mining companies, farms, financial services and fisheries, among others.



Page: 157

Learning Objective: 1


13. The largest type of organization in the industrial market is __________.

a) manufacturers

b) construction firms

c) agricultural firms

d) mining companies

e) services

Ans: e


Feedback: Companies that primarily sell physical goods (manufacturers; mining; construction; and farms, timber and fisheries) represent 26 percent of all the industrial firms. Service companies represent about 74 percent of all industrial firms.

Page: 157

Learning Objective: 1

14. An industrial firm is a firm that __________.

a) is distinguished by the amount of energy it uses and potential for pollution to the environment

b) employs more than 500 people, who are paid minimum wage with few or no benefits

c) deals exclusively with federal, state and local governments and often mediates governmental agency disputes


d) in some way reprocesses a good or service it buys before selling the product again to the next buyer

e) is most likely to be located in the eastern U.S. and operates out of a factory

Ans: d

Feedback: Key term definition—industrial firms



Page: 157

Learning Objective: 1


15. __________ reprocess a good or service they buy before selling the product again to the next buyer.

a) Industrial firms

b) Reseller firms

c) Government agencies

d) Wholesalers

e) Retail firms

Ans: a


Page: 157

Learning Objective: 1


16. The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with finance, insurance and __________ and transportation, communication and public utility firms, these firms represent about 74 percent of all industrial firms.

a) real estate businesses

b) wholesalers

c) retailers

d) government units

e) educational institutions

Ans: a


Feedback: The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with finance, insurance and real estate businesses and transportation, communication, public utility firms and not-for-profit organizations, service companies represent about 74 percent of all industrial firms.

Page: 157

Learning Objective: 1

17. The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with __________, insurance and real estate businesses and transportation, communication and public utility firms, these firms represent about 74 percent of all industrial firms.


a) finance

b) wholesalers

c) retailers

d) government units

e) educational institutions

Ans: a


Feedback: The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with finance, insurance and real estate businesses and transportation, communication, public utility firms and not-for-profit organizations, service companies represent about 74 percent of all industrial firms.

Page: 157

Learning Objective: 1
18. The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with finance, insurance and real estate businesses and __________, communication and public utility firms, these firms represent about 74 percent of all industrial firms.

a) transportation

b) wholesalers

c) retailers

d) government units

e) educational institutions

Ans: a


Feedback: The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with finance, insurance and real estate businesses and transportation, communication, public utility firms and not-for-profit organizations, service companies represent about 74 percent of all industrial firms.

Page: 157

Learning Objective: 1
19. The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with finance, insurance and real estate businesses and transportation, __________ and public utility firms, these firms represent about 74 percent of all industrial firms.

a) communication

b) wholesalers

c) retailers

d) government units

e) educational institutions

Ans: a


Feedback: The services market sells diverse services such as legal advice, auto repair and dry cleaning. Along with finance, insurance and real estate businesses and transportation, communication, public utility firms and not-for-profit organizations, service companies represent about 74 percent of all industrial firms.

Page: 157

Learning Objective: 1
20. Archer Daniels Midland (ADM) Co. is the world's largest cocoa-bean processor. It buys cocoa beans and converts the beans into cocoa powder and cocoa butter, which it sells to companies that manufacture consumer products that contain chocolate. The cocoa-bean processor is operating in a(n) __________ market.

a) reseller

b) government

c) psychographic

d) product-intensive

e) industrial

Ans: e


Feedback: Marketing organizations operating in an industrial market buy a good or service, reprocess that good or service and then sell the product or service to another buyer. In this instance, the cocoa-bean processor buys cocoa beans, reprocesses them and then resells them to consumer food manufacturers.

Page: 157

Learning Objective: 1
21. Mile High Frozen Foods is a distributor for McDonalds. They also bake the buns used by McDonalds in several states. They purchase flour, yeast, sesame seeds, manufacture the buns and then distribute them to the retail stores. Mile High Frozen Foods is operating in a(n) __________ market.

a) reseller

b) government

c) institutional

d) psychographic

e) industrial

Ans: e

Feedback: Marketing organizations operating in an industrial market buy a good or service, reprocess that good or service and then sell the product to another buyer. In this case, the company buys flour, yeast, sesame seeds and other required ingredients and manufactures buns to be used in the retail stores.

Page: 157

Learning Objective: 1

22. Graham-Field Health Products makes hospital beds and wheelchairs from component parts and materials it buys. It sells its products to hospitals, nursing homes and retailers of health care products. Graham-Field Health Products operates in a(n) __________ market.

a) consumer

b) government

c) industrial

d) reseller

e) demographic

Ans: c


Feedback: Marketing organizations operating in an industrial market buy a good or service, reprocess that good or service and then sell the product to another buyer. In this case, the firm buys the mattresses, wheels, metal component parts, etc. and makes wheelchairs and hospital beds before selling them to hospitals, nursing homes and retailers of health care products.

Page: 157

Learning Objective: 1
23. Wholesalers and retailers that buy physical products and resell them without any reprocessing are __________.

a) industrial firms



b) reseller firms

c) government firms

d) facilitators

e) non-profit firms

Ans: b

Page: 157



Learning Objective: 1
24. The reseller market includes __________.

a) manufacturers and service providers

b) transportation providers and other facilitators

c) government agencies and service providers

d) agricultural markets and the mining industry

e) retailers and wholesalers

Ans: e


Page: 157

Learning Objective: 1

25. Itex Corporation, marketer of Photostat products used in the graphic arts field, buys sensitized paper from Eastman Kodak Company, packages it with the Photostat brand name on it and sells it directly to amateur photographers. In this context, Itex Corporation is most accurately classified as a __________.

a) service provider

b) monopoly


c) reseller

d) industrialist

e) capitalist

Ans: c


Feedback: Resellers are wholesalers and retailers who buy physical products and resell them again without any reprocessing. Repackaging, such as Itex does with photosensitive paper, does not constitute reprocessing.

Page: 157

Learning Objective: 1
26. Apex Therapeutic buys medical supplies and services from a multitude of sources for people with hemophilia and other related blood diseases. It then sells these products to anyone who needs them. When it sells directly to a person who is a hemophiliac, it would most accurately be classified as a(n) __________.

a) service provider

b) monopoly

c) reseller

d) industrialist

e) capitalist

Ans: c


Feedback: Resellers are wholesalers and retailers who buy physical products and resell them again without any reprocessing.

Page: 157

Learning Objective: 1
27. In terms of organizational buyers, Amazon.com, Takashimaya and 7-Eleven would all be classified as __________.

a) capitalists



b) resellers

c) monopolists

d) facilitators

e) industrialists

Ans: b

Feedback: Resellers are retailers who buy physical products and resell them again without any reprocessing.



Page: 157

Learning Objective: 1


28. ___________ are federal, state and local agencies that buy goods and services for the constituents they serve.

a) Industrial markets

b) Reseller markets

c) Cooperative markets


d) Government units

e) Facilitating agents

Ans: d

Page: 158


Learning Objective: 1
29. When Louisiana State University buys new laptops for its faculty it is operating as a(n) __________.

a) industrial market

b) business market

c) government unit

d) facilitating agent

e) service provider

Ans: c


Feedback: Government units are federal, state (such as a state university) and local agencies that buy goods and services for the constituents they serve.

Page: 158

Learning Objective: 1
30. When the Federal Aviation Administration purchases 3,000 computerized workstations for 22 major air traffic control centers in the U.S., it is operating as a(n) __________.

a) industrial market

b) business market

c) government unit

d) facilitating agent

e) service provider

Ans: c


Feedback: Government units are federal (Federal Aviation Administration), state and local agencies that buy goods and services for the constituents they serve.

Page: 158

Learning Objective: 1
31. International trade statistics indicate the largest exporting industries in the United States focus on __________, not __________.

a) organizational customers; ultimate consumers

b) ultimate consumers; organizational consumers

c) governmental agencies; ultimate consumers

d) governmental agencies; organizational consumers

e) ultimate consumers; governmental agencies

Ans: a

Feedback: International trade statistics indicate that the largest exporting industries in the United States focus on organizational customers, not ultimate customers.

Page: 158

Learning Objective: 1

32. U.S. based Pratt & Whitney sells aircraft engines to Europe's Airbus Industry, which sells passenger airplanes to Japan Airlines, which flies businesspeople around the world. This is an example of __________.

a) the circular flow of products

b) reseller dynamics

c) global organizational markets

d) organizational clusters

e) market elasticity principles

Ans: c


Feedback: Industrial, reseller and government markets exist on a global scale. The majority of world trade involves exchange relationships that span the globe.

Page: 158

Learning Objective: 1
33. Amtrak, the U.S. passenger train service, purchases train sets from Siemens, a German manufacturing company. This purchase is an example of __________.

a) the circular flow of products

b) market dynamics

c) global organizational markets

d) organizational clusters

e) market elasticity principles

Ans: c


Feedback: Industrial, reseller and government markets exist on a global scale. The majority of world trade involves exchange relationships that span the globe.

Page: 158

Learning Objective: 1
34. U.S.-based Pratt and Whitney manufactures the liquid hydrogen-fueled rocket engine used in the Atlas, Titan and Delta launch vehicles made by Lockheed-Martin and Boeing. These rockets are then sold to space agencies of many countries for use in deploying communication and weather satellites. These transactions are examples of __________.

a) the circular flow of products

b) market dynamics

c) global organizational markets

d) organizational clusters

e) market elasticity principles

Ans: c


Feedback: Industrial, reseller and government markets exist on a global scale. The majority of world trade involves exchange relationships that span the globe.

Page: 158

Learning Objective: 1
35. The industrial classification system that is used by the United Nations consisting of one letter to classify industries into sections is called the __________.

a) Strategic International Classification (SIC)

b) Federated Domestic and International Classification (FDIC)

c) Federated Trade Codification (FTC)



d) International Standard Industrial Classification (ISIC)

e) Federated System of Listing International Corporations (FSLIC)

Ans: d

Page: 159



Learning Objective: 1
36. The North American Product Classification System (NAPCS) provides a common classification system for products and services that is consistent across __________.

a) Canada

b) U.S.A.

c) Mexico



d) all of the above

e) none of the above

Ans: d

Page: 160



Learning Objective: 1
37. The demand for industrial products and services that is driven by demand for consumer products and services is called __________.

a) the Gross National Product



b) derived demand

c) the Consumer Demand index

d) break-even demand

e) gross Industrial demand

Ans: b

Page: 162



Learning Objective: 2

38. Derived demand means the demand for industrial products and services is driven by or derived, from __________.

a) mathematical formulas and/or statistical models

b) the Gross National Product


c) demand for consumer goods and services

d) demand for industrial goods

e) the Gross Industrial Product

Ans: c


Page: 162

Learning Objective: 2


39. During late summer and early fall, there is a large demand for containers located in Asia that are used to ship consumer goods from Asia to the United States in time for the holiday selling season. The demand for these containers is __________ demand.

a) unitized



b) derived

c) consumer

d) applied

e) horizontal

Ans: b

Feedback: Derived demand means that the demand for industrial products and services is driven by or derived from, demand for consumer products and services. The demand for containers is driven by consumer demand for goods manufactured in Asia.



Page: 162

Learning Objective: 2


40. Spruceland Millworks in Canada makes wooden pallets for transporting and storing new appliances such as stoves, freezers and refrigerators. What kind of demand is there for Spruceland pallets?

a) There is creative demand, which is tied to the sales of appliances, not the sale of the pallets

b) There is derived demand, which is tied to the sales of appliances, but independent of the sales of pallets

c) There is derived demand, which is tied to the sales of pallets, which in turn is tied to the sales of appliances

d) There is inelastic demand tied to the cost of the components of the pallets

e) There is elastic demand tied to the cost of the components of the pallets

Ans: c

Feedback: Derived demand means that the demand for industrial products and services is driven by or derived from, demand for consumer products and services. The demand for the pallets is driven by the sales of (demand for) appliances.

Page: 162

Learning Objective: 2

41. Concert Staging Company provides the stage, the roof system and lighting and sound for outdoor concerts and theaters. It is typically hired by the organization sponsoring the event. When the economy slows down, consumers are more likely to save their money for a rainy day than buy a concert or theater ticket. The number of concert and theater events determines how many times the company gets to provide its services. Demand for the services provided by Concert Staging Company is __________ demand.




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