4 Business objectives

Multiple-choice questions

1 What is a mission statement?

a a set of SMART objectives
b the individual targets set for employees
c corporate objectives
d a statement of the business’s central purpose

2 What are corporate aims?

a specific short-term goals of the business
b a statement of the business’s mission
c departmental objectives
d the long-term goals a business hopes to achieve

3 What does the M in SMART stand for?

a measurable
b meaningful
c marketing
d motivational

4 Profit satisficing is best defined as:

a aiming to achieve a small amount of profit
b aiming to achieve enough profit to keep owners happy
c using retained profit to achieve a satisfactory rate of business growth
d aiming to achieve the highest possible level of profit.

5 All of the following are generally considered to be benefits of establishing corporate

aims except:
a They are the starting point for setting business objectives on which effective
management is based.
b They allow an assessment to be made, at a later date, of a business’s success.
c They help develop a sense of purpose within an organisation.
d They provide detailed working objectives for the business.

6 Which of the following is the most likely corporate objective of a newly

established business?
a profit maximisation
b survival
c maximising short-term sales revenue
d corporate social responsibility

Chapter 4 Multiple-choice questions © Cambridge University Press 2010 1

7 Which of the following is not an element of management by objectives?
a participation in setting objectives
b aligning objectives of each individual with the objectives of the business
c setting an explicit time period for the achievement of objectives
d ensuring that objectives are socially responsible

8 Which of the following is least likely to be an objective of a public-sector

organisation?
a maximising profit
b providing a high-quality service
c meeting the needs of stakeholders
d providing a public service

9 Why is there often a conflict between the objectives of short-term profit and
growth?
a Short-term profit requires a firm to use its resources efficiently.
b Growth may require increased expenditure on promotion.
c Dividends have to be paid to shareholders.
d Larger businesses may experience diseconomies of scale.

10 Having set objectives, a business may face constraints that hinder progress toward
those objectives. Which of the following is an external constraint?
a a lack of profit to meet the objectives
b an industrial dispute with workers
c a change in bank interest rates
d poor communication within the business

Chapter 4 Multiple-choice questions © Cambridge University Press 2010 2