summary of strategic management and competitive advantage
Strategic Management and Competitive Advantage, 4e (Barney)
Chapter 1 What Is Strategy and the Strategic Management Process?
1) One of the central questions that all strategic managers must address, regardless of the
industry they work in, is "What is our competition going to do next?"
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.1
2) There is complete consensus among strategic managers and academic researchers about what
a "strategy" is.
Answer: FALSE
Diff: 1 Page Ref: 4
Objective: 1.1
3) For the purposes of this book, a firm's strategy is defined as its theory about how to gain
competitive advantages.
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.1
4) A "good strategy" does not necessarily have to create a competitive advantage.
Answer: FALSE
Diff: 2 Page Ref: 4
Objective: 1.1
5) The greater the extent to which a firm's assumptions and hypotheses accurately describe how
the competition in the industry is likely to evolve, and how that evolution can be exploited to
earn a profit, the more likely it is that a firm will gain a competitive advantage from
implementing its strategies.
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.1
6) It is usually possible to know for sure that a firm is choosing the right strategy.
Answer: FALSE
Diff: 2 Page Ref: 4
Objective: 1.1
7) The strategic management process is a sequential set of analyses and choices that can increase
the likelihood that a firm will choose a good strategy that generates competitive advantages.
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.2
1
,8) The second step in the strategic management process is the definition of a firm's mission.
Answer: FALSE
Diff: 1 Page Ref: 4
Objective: 1.2
9) A firm's mission defines both what it wants to be in the long run and what it wants to avoid in
the meantime.
Answer: TRUE
Diff: 1 Page Ref: 5
Objective: 1.2
10) Mission statements often contain so many common elements that even if a firm's mission
statement does not influence behavior throughout an organization, it is likely to have a
significant impact on a firm's actions.
Answer: FALSE
Diff: 2 Page Ref: 5
Objective: 1.2
11) Firms whose mission statement is central to all they do are known as missionary firms.
Answer: FALSE
Diff: 1 Page Ref: 5
Objective: 1.2
12) Visionary firms earn substantially higher returns than average firms because they
acknowledge that profit maximizing is their primary reason for existence.
Answer: FALSE
Diff: 3 Page Ref: 5
Objective: 1.2
13) Mission statements that are very inwardly focused and are defined only with reference to the
personal values and priorities of its founders and top managers can hurt a firm's performance.
Answer: TRUE
Diff: 2 Page Ref: 7
Objective: 1.2
14) Objectives are the specific measurable targets a firm can use to evaluate the extent to which
it is realizing its mission.
Answer: TRUE
Diff: 1 Page Ref: 8
Objective: 1.2
15) High quality objectives are tightly connected to the elements of a firm's mission but tend to
be relatively difficulty to measure and track over time.
Answer: FALSE
Diff: 3 Page Ref: 8
Objective: 1.2
2
, 16) By conducting an external analysis, a firm identifies the critical threats and opportunities in
the industry's competitive environment.
Answer: TRUE
Diff: 2 Page Ref: 8
Objective: 1.2
17) Corporate level strategies are actions firms take to gain competitive advantages in a single
market or industry.
Answer: FALSE
Diff: 1 Page Ref: 9
Objective: 1.2
18) Business level strategies are actions firms take to gain competitive advantages by operating
in multiple markets or industries simultaneously.
Answer: FALSE
Diff: 1 Page Ref: 9
Objective: 1.2
19) Strategy implementation occurs when a firm adopts organizational policies and practices that
are consistent with its strategy.
Answer: TRUE
Diff: 1 Page Ref: 10
Objective: 1.2
20) In general, a firm has a competitive advantage when it is able to create more economic value
than rival firms.
Answer: TRUE
Diff: 1 Page Ref: 10
Objective: 1.3
21) The size of a firm's competitive advantage is the sum of the economic value a firm is able to
create and the economic value rivals are able to create.
Answer: FALSE
Diff: 2 Page Ref: 10
Objective: 1.3
22) A sustained competitive advantage is virtually permanent.
Answer: FALSE
Diff: 2 Page Ref: 11
Objective: 1.3
23) Firms that create the same economic value as their rivals experience competitive parity.
Answer: TRUE
Diff: 1 Page Ref: 11
Objective: 1.3
3
Strategic Management and Competitive Advantage, 4e (Barney)
Chapter 1 What Is Strategy and the Strategic Management Process?
1) One of the central questions that all strategic managers must address, regardless of the
industry they work in, is "What is our competition going to do next?"
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.1
2) There is complete consensus among strategic managers and academic researchers about what
a "strategy" is.
Answer: FALSE
Diff: 1 Page Ref: 4
Objective: 1.1
3) For the purposes of this book, a firm's strategy is defined as its theory about how to gain
competitive advantages.
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.1
4) A "good strategy" does not necessarily have to create a competitive advantage.
Answer: FALSE
Diff: 2 Page Ref: 4
Objective: 1.1
5) The greater the extent to which a firm's assumptions and hypotheses accurately describe how
the competition in the industry is likely to evolve, and how that evolution can be exploited to
earn a profit, the more likely it is that a firm will gain a competitive advantage from
implementing its strategies.
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.1
6) It is usually possible to know for sure that a firm is choosing the right strategy.
Answer: FALSE
Diff: 2 Page Ref: 4
Objective: 1.1
7) The strategic management process is a sequential set of analyses and choices that can increase
the likelihood that a firm will choose a good strategy that generates competitive advantages.
Answer: TRUE
Diff: 1 Page Ref: 4
Objective: 1.2
1
,8) The second step in the strategic management process is the definition of a firm's mission.
Answer: FALSE
Diff: 1 Page Ref: 4
Objective: 1.2
9) A firm's mission defines both what it wants to be in the long run and what it wants to avoid in
the meantime.
Answer: TRUE
Diff: 1 Page Ref: 5
Objective: 1.2
10) Mission statements often contain so many common elements that even if a firm's mission
statement does not influence behavior throughout an organization, it is likely to have a
significant impact on a firm's actions.
Answer: FALSE
Diff: 2 Page Ref: 5
Objective: 1.2
11) Firms whose mission statement is central to all they do are known as missionary firms.
Answer: FALSE
Diff: 1 Page Ref: 5
Objective: 1.2
12) Visionary firms earn substantially higher returns than average firms because they
acknowledge that profit maximizing is their primary reason for existence.
Answer: FALSE
Diff: 3 Page Ref: 5
Objective: 1.2
13) Mission statements that are very inwardly focused and are defined only with reference to the
personal values and priorities of its founders and top managers can hurt a firm's performance.
Answer: TRUE
Diff: 2 Page Ref: 7
Objective: 1.2
14) Objectives are the specific measurable targets a firm can use to evaluate the extent to which
it is realizing its mission.
Answer: TRUE
Diff: 1 Page Ref: 8
Objective: 1.2
15) High quality objectives are tightly connected to the elements of a firm's mission but tend to
be relatively difficulty to measure and track over time.
Answer: FALSE
Diff: 3 Page Ref: 8
Objective: 1.2
2
, 16) By conducting an external analysis, a firm identifies the critical threats and opportunities in
the industry's competitive environment.
Answer: TRUE
Diff: 2 Page Ref: 8
Objective: 1.2
17) Corporate level strategies are actions firms take to gain competitive advantages in a single
market or industry.
Answer: FALSE
Diff: 1 Page Ref: 9
Objective: 1.2
18) Business level strategies are actions firms take to gain competitive advantages by operating
in multiple markets or industries simultaneously.
Answer: FALSE
Diff: 1 Page Ref: 9
Objective: 1.2
19) Strategy implementation occurs when a firm adopts organizational policies and practices that
are consistent with its strategy.
Answer: TRUE
Diff: 1 Page Ref: 10
Objective: 1.2
20) In general, a firm has a competitive advantage when it is able to create more economic value
than rival firms.
Answer: TRUE
Diff: 1 Page Ref: 10
Objective: 1.3
21) The size of a firm's competitive advantage is the sum of the economic value a firm is able to
create and the economic value rivals are able to create.
Answer: FALSE
Diff: 2 Page Ref: 10
Objective: 1.3
22) A sustained competitive advantage is virtually permanent.
Answer: FALSE
Diff: 2 Page Ref: 11
Objective: 1.3
23) Firms that create the same economic value as their rivals experience competitive parity.
Answer: TRUE
Diff: 1 Page Ref: 11
Objective: 1.3
3
