Test Bank Chapter 5 Business Mission And Strategy

Entrepreneurship, 3e (Bamford)

Chapter 5 Business Mission and Strategy

1) A mission statement is a long narrative used to summarize a business.

2) A mission must have direct applicability to even the most entry-level employee for it to be utilized effectively by every member of the company.

3) Unlike large companies, new businesses can afford to have people who just follow procedures rather than use all of their skills and creative abilities.

4) As a business grows, it gets progressively more difficult to change its direction.

5) A mission statement can keep a small business away from areas that sound promising and profitable.

6) It is critical for a new business to conserve its resources and focus on areas that have the potential to maximize the firm's success.

7) To be most effective, a mission statement should be complex and universal.

8) A mission statement should be specific and establish measurable goals for the business to accomplish.

9) A mission statement of a firm that states "to make money" would be very effective.

10) A mission statement needs to be known to all the employees, not just the top management.

11) The mission of a business needs to be actionable, that is, it should provide employees with the information they need to make decisions.

12) An orthodox scale is a measure to evaluate whether a person or firm is meeting stated goals.

13) A metric is a type of measurement used to evaluate whether a person or firm is meeting its goals.

14) A quantitative measure is the corporate culture of an organization.

15) An example of a quantitative measure could be the financial goals of an organization.

16) An example of a qualitative measure could be customer service reviews.

17) The key to the ability to communicate a mission easily is that the statement be simple, direct, and appropriate.

18) An advantage of a well-developed mission statement is that it is able to guide everyone in the organization toward the goals that the owners have set.

19) All individual competitive advantages eventually disappear as industries change and competitors adapt.

20) A sustainable competitive advantage is an advantage that other firms cannot immediately copy.

21) The cornerstone of building a competitive advantage is a deep understanding of your customer's needs.

22) It is easy for large organizations to develop a compelling personal relationship with customers.

23) A firm's first step in identifying a sustainable competitive advantage is to evaluate its unique resources or capabilities.

24) The time lag between the introduction of the competitive advantage and the point where competitors can match an entrepreneur's advantage is the window where the new business can earn unique returns.

25) The computers in a company are an example of tangible assets.

26) Intangible assets are the capabilities and skills of the founder(s) and employees.

27) One example of a key tangible asset is a strong working relationship with a vendor. 

28) Christina started a business that created a new lemon-peppermint shampoo that was so popular the customers became loyal to the product. This is considered a first-mover advantage.

29) Patents are considered to be intangible assets.

30) Gators is a business that created a shoe that is a knock-off of the famous Crocks shoes. Gators is called a follower.

31) One way of having a competitive advantage is to have a close working relationship with your vendors.

32) Economic rents exist when a company matches the industry average in ordinary returns.

33) Economic rents refer to the financial gains made from an asset that is in excess of the ordinary returns in a particular industry.

34) If a business's resource or capability is matched by one of its competitors, it becomes the standard expectation in the industry.

35) A small business owner must understand what the customer values and how much money the customer is willing to pay to obtain the firm's product or service. 

36) The time lag between the introduction of a competitive advantage and the point where competitors can match an entrepreneur's advantage is the window where a new business can earn unique returns.

37) Michael Porter describes a differentiation approach as one where a firm seeks to be the lowest-cost competitor in the industry.

38) Michael Porter describes a low-cost strategy as a company seeking to be the lowest-cost firm in the industry.

39) A strategy is a broad approach used by a small business to accomplish its mission.

40) The mission is the foundation on which a firm's strategy is built.

41) A business owner should never change the mission statement or strategy of the business.

42) ________ summarize how and where the firm will compete in the industry.

A) Core values

B) Mission statements

C) Strategies

D) Goal statements

43) A mission statement can also be described as ________.

A) the overall strategy

B) goals

C) simple rules

D) All of these

44) A firm's mission statement

A) helps the business by targeting its efforts in specific areas.

B) helps the business specify what the business does best.

C) helps the business stay away from things that sound promising but away from its focus.

D) all of these.

45) ________ are resources that combine to allow a firm to do things better than its competitors.

A) Trade-outs

B) Measurable goals

C) Analytical tools

D) Capabilities

46) The mission of any business needs to be ________.

A) measurable

B) actionable

C) dynamic

D) stagnant

47) Which of the following is a characteristic of a mission statement?

A) The statement must be understandable and memorable for all those who come in contact with it.

B) The statement must be worded in a complex fashion in order to have the maximum impact.

C) The statement must include lots of adjectives and descriptive language about how the company will accomplish its mission.

D) The statement must be like a tome that describes everything that the founder has done and might do.

48) What are the two measures used to evaluate whether a person or firm is meeting its goals?

A) Orthodox and unorthodox

B) Quantitative and qualitative

C) Actionable and nonactionable

D) Tangible and intangible

49) The book mentions that organizations should develop quantitative measures of success. Which of the following are characteristic of quantitative measures?

A) They are tied to the strategic or financial goals of an organization.

B) They are not easy to develop.

C) They can be difficult to implement.

D) They are specific in nature.

50) Which of the following is NOT a characteristic of a sustainable competitive advantage?

A) It does not impact the implementation of the mission statement.

B) It requires a deep understanding of customers' needs.

C) It should be maintained in the business as long as possible.

D) It cannot be copied immediately by others.

51) ________ provide(s) you with the opportunity to make money when other businesses cannot easily copy your advantages.

A) Orthodox practices

B) Unorthodox practices

C) Sustainable competitive advantage

D) Tangible assets

52) Larry is the owner of an instant noodle manufacturing company. His company has created a special combination of ingredients that makes his product tastier than the ones currently existing in the market. Larry knows that this combination of ingredients cannot be easily copied. This is an example of ________.

A) entrepreneurial breakeven

B) sustainable competitive advantage

C) benchmarking

D) bootstrap marketing

53) Acme Corporation has introduced a new probiotic product in the market. It has the benefit of being the first to introduce a probiotic product in the market and has gained tremendous customer loyalty. This is an example of ________.

A) a harvest plan

B) entrepreneurial breakeven

C) sustainable competitive advantage

D) bootstrap marketing

54) Denny is the owner of a popular ice-cream parlor. He also has a retail distribution network in the form of ice-cream vans that go around the city. With the help of this distribution network, Denny is able to efficiently manage the movement of goods and keep the costs lower than other ice-cream shops. This is an example of ________.

A) bounded rationality

B) organizational slack

C) entrepreneurial breakeven

D) sustainable competitive advantage

55) Globex Corporation is considered to be a pioneer in robotics engineering. Products developed by their R & D division are used for a variety of purposes, ranging from defense to infrastructure development. It is the only organization in the country that simultaneously generates revenue and contributes to society with its business. This is an example of ________.

A) sustainable competitive advantage

B) benchmarking

C) bounded rationality

D) organizational slack

56) Sterling Corporation is a market leader in producing cancer medicines. Its produces top-quality products that are popular in markets around the world. Due to its brand image, it is able to manipulate prices and gain huge profits while maintaining market share. In addition, it has a highly skilled innovations team that produces unique products. This is an example of ________.

A) benchmarking

B) sustainable competitive advantage

C) bootstrap marketing

D) organizational slack

57) Jane has developed a special Italian sauce for pizza. The sauce cannot be easily copied. This is a(n) ________.

A) orthodox practice

B) unorthodox practice

C) sustainable competitive advantage

D) tangible asset

58) According to the book, the greatest source of sustainable advantage is ________.

A) personal relationships with customers

B) location

C) staffing

D) relationships with vendors

59) All of these are steps in identifying a sustainable competitive advantage EXCEPT

A) develop a list of the business assets and capabilities.

B) develop a list of all potential customers.

C) break the list of capabilities into standard and unique.

D) evaluate the unique resources.

60) ________ are items that include equipment or location.

A) Critical assets

B) System assets

C) Tangible assets

D) Intangible assets

61) ________ are the capabilities and skills of the founder(s) or employees.

A) System assets

B) Critical assets

C) Tangible assets

D) Intangible assets

62) All of these are tangible assets EXCEPT

A) location.

B) industry experience.

C) computer systems.

D) business license.

63) All of these are intangible items EXCEPT

A) industry experience.

B) education.

C) initial financing.

D) name branding.

64) Which of the following is an example of tangible assets?

A) Industry experience

B) Contacts

C) Education

D) All of these

65) Which of the following is an example of intangible assets?

A) Previous start-up experience

B) Unique knowledge of the industry

C) Skill set of founder(s)

D) All of these

66) James has the benefit of gaining customer loyalty by being the first company to bring out a new gourmet burger. This is a form of ________.

A) sustainable competitive advantage

B) first-mover advantage

C) leader advantage

D) tangible assets advantage

67) ________ are firms that enter a market after the first mover.

A) Second movers

B) Followers

C) Nonleaders

D) Market movers

68) Sally copies Jamie's hamburger restaurant by starting her own hamburger restaurant on the other side of town. This is an example of a ________.

A) second mover

B) follower

C) nonleader

D) market mover

69) Which of the following is an example of intangible assets?

A) Inventory

B) Name branding

C) Building location

D) Initial financing

70) Which of the following is an example of tangible assets?

A) Education

B) Previous start-up experience

C) Software and systems for business

D) Unique knowledge of the industry

71) Which of the following is NOT a characteristic of firms that are followers?

A) They do not get the loyalty of customers.

B) They can benefit by learning from the first movers.

C) They are the firms that enter the market after the first mover.

D) They are often more successful than the first-mover firms because they do not repeat their predecessor's mistakes.

72) Identify a true statement about competitive advantage.

A) Successful businesses generally have only one source of competitive advantage.

B) Businesses must develop an effective mission statement before developing a list of what might constitute its competitive advantage.

C) An effective mission statement and sustainable advantage are mutually independent of each other.

D) The predominant approach used by strategists to gain competitive advantage is the resource-based perspective.

73) Keith is setting up a new bar in his locality. He knows that there are only a handful of bars in the area where he wishes to conduct business. He locates his bar at one of the four corners at a busy intersection. The other three corners are occupied by a clothing outlet, a restaurant, and a library, respectively. Keith knows that his bar's location gives him a competitive advantage. In the context of the components of resource-based analysis, Keith is able to achieve competitive advantage because his product or service is ________.

A) rare

B) nonsubstitutable

C) durable

D) valuable

74) In the context of the components of resource-based analysis, if a firm's resource or capability cannot be replaced easily by something else then it is said to be ________.

A) valuable

B) nonsubstitutable

C) durable

D) rare

75) Richard is the owner of a very popular burger joint in his locality. He knows that his burger joint's location and excellent customer service give him a competitive advantage over other burger joints. He is conducting a research to understand if there are other burger joints that provide the same sort of services that his joint does. He also intends to know if his competitors have the financial means to do so and if they seem to care about what his joint offers. In the context of the components of resource-based analysis, Richard is trying to understand if his product or service is ________.

A) valuable

B) rare

C) durable

D) nonsubstitutable

76) Gareth is the owner of a popular car wash facility. He has a small cafe set up beside the facility where customers can have a quick snack while waiting for their vehicles. Also, he ensures that each and every customer gets the best service in town. Customers do not mind paying extra because of these reasons. In fact, Gareth noticed that in the last 6 months, he has received several new customers who were previously engaged with his competitors. In the context of the components of resource-based analysis, Gareth's product or service is ________.

A) rare

B) nonsubstitutable

C) durable

D) valuable

77) Jamie's hamburger restaurant had financial gains from an asset or capability that are in excess of the ordinary returns in that industry. This is called a(n) ________.

A) extraordinary asset

B) venture capability

C) good business decision

D) economic rent

78) All of these are criteria in deciding extraordinary resources in a company EXCEPT:

A) elastic.

B) rare.

C) valuable.

D) durable.

79) All of these are ways to establish value EXCEPT:

A) developing rapport with the customer.

B) charging more.

C) obtaining more customers.

D) reducing costs to the customer.

80) Strategy is a ________ field of study.

A) simple

B) complex

C) varied

D) convoluted

81) What are the three means to view business strategy developed by Michael Porter?

A) High cost, unsuitable, and focus

B) Low cost, unsuitable, and focus

C) High cost, differentiation, and focus

D) Low cost, differentiation, and focus

82) A ________ exists when a firm finds a unique position in the market through a product or service.

A) differentiation approach

B) low-cost approach

C) first-mover approach

D) sustainable competitive advantage approach

83) A ________ occurs when a firm seeks to be the lowest-cost competitor in the industry.

A) differentiation approach

B) low-cost approach

C) first-mover approach

D) sustainable competitive advantage approach

84) A focus differentiation strategy revolves around

A) knowing all your potential customers.

B) crafting a business with small geographic approach.

C) establishing measurable goals.

D) making the capability valuable.

85) Which of the following is the first logical step in developing a firm's strategy?

A) Employing a firm's mission statement to specify where the firm is to compete and how

B) Laying out a detailed strategic plan to specify a series of resources that will be used to meet each part of the mission and strategy

C) Ensuring that the strategy meets the criterion of being defendable for some length of time

D) Evaluating the strategy constantly to ensure that the competitive advantage relative to the firm's competitors is still relevant

86) ________ are resources that combine to allow a firm to do things better than its competitors.

87) A ________ is a measure to evaluate whether a person or firm is meeting stated goals. 

88) ________ measures are tied to financial or strategic goals of a company. 

89) ________ measures deal with the "feel" of an organization.

90) ________ is where a company has an advantage that other firms cannot immediately copy.

91) ________ assets are the capabilities and skills of the founder(s) or employees.

92) ________ is the benefit of gaining customer loyalty by being the first firm to provide a new product or service in the market.

93) ________ are the financial gains gathered from an asset or capability that are in excess of the ordinary returns in that particular industry. 

94) A ________ is a broad approach that a small business will use to accomplish its mission.

95) Describe how a mission statement and strategy assist in the success of a business.

96) List and describe the elements of designing a mission statement.

97) Explain and give examples of the two metrics in establishing measurable goals.

98) Explain the three steps for identifying a sustainable competitive advantage.

99) Why is it critical for owners of apps to build strong personal relationships with customers?

100) What is the difference between a tangible and an intangible asset? Provide examples.

101) List the four criteria for developing an unorthodox capability.

102) Describe the four logical steps in developing a firm's strategy.

103) According to Michael Porter, what are the three broad means to view a business's strategy? Why do firms use a combination of these strategies?