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Strategic Management and Competitive Advantage, 5e (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 "How is the industry likely to evolve?"

Answer: TRUE

Diff: 1

Learning Obj.: 1.1: Define Strategy

AACSB: Analytical Thinking



2) There is complete consensus among strategic managers and academic researchers
about what a "strategy" is.

Answer: FALSE

Diff: 1

Learning Obj.: 1.1: Define Strategy

AACSB: Analytical Thinking



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

Learning Obj.: 1.1: Define Strategy

AACSB: Analytical Thinking



4) A "good strategy" does not necessarily have to create a competitive advantage.

Answer: FALSE

,Diff: 2

Learning Obj.: 1.1: Define Strategy

AACSB: Analytical Thinking



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

Learning Obj.: 1.1: Define Strategy

AACSB: Analytical Thinking



6) It is usually possible to know for sure that a firm is choosing the right strategy.

Answer: FALSE

Diff: 2

Learning Obj.: 1.1: Define Strategy

AACSB: Analytical Thinking

,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

Learning Obj.: 1.2: Describe the Strategic Management Process

AACSB: Analytical Thinking

8) The second step in the strategic management process is the definition of a firm's
mission.

Answer: FALSE

Diff: 1

Learning Obj.: 1.2: Describe the Strategic Management Process

AACSB: Analytical Thinking



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

Learning Obj.: 1.2: Describe the Strategic Management Process

AACSB: Analytical Thinking



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

Learning Obj.: 1.2: Describe the Strategic Management Process

, AACSB: Analytical Thinking



11) Firms whose mission statement is central to all they do are known as missionary
firms.

Answer: FALSE

Diff: 1

Learning Obj.: 1.2: Describe the Strategic Management Process

AACSB: Analytical Thinking



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

Learning Obj.: 1.2: Describe the Strategic Management Process

AACSB: Analytical Thinking



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

Learning Obj.: 1.2: Describe the Strategic Management Process

AACSB: Analytical Thinking



14) Objectives are the specific measurable targets a firm can use to evaluate the extent to
which it is realizing its mission.

Answer: TRUE