190 test bank for concepts strategic management and competitive advantage 3rd edition barney

D below average accounting performance Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as... The percentage of a fi

Test Bank for Concepts Strategic Management and Competitive Advantage 3rd Edition Barney

80 Test Bank True – False Questions

20 Test Bank Free Text Questions

90 Test Bank Multiple Choice Questions

Multiple Choice Questions - Page 1

From 1926 to 1995, visionary firms earned returns compared to firms that were not visionary firms

4 D) functional level strategies.

Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously are known as

1 A) corporate level strategies.

2 B) macro level strategies.

3 C) business level strategies.

The sequential set of analyses and choices that can increase the

likelihood that a firm will choose a strategy that generates competitive advantages is the

1 A) strategic management process.

2 B) organizational change process.

3 C) mission statement process.

4 D) goal setting process.

A firm's is a measure of its competitive advantage calculated using information from a firm's published profit and loss and balance sheet statements

1 A) above average accounting performance

2 B) below average economic performance

3 C) above average economic performance

4 D) below average accounting performance

Ratios that focus on the level of a firm's financial flexibility, including its ability to obtain more debt, are known as

In many ways, the difference between traditional economics research and strategic management research is that the former attempts to explain why , while the latter attempts to explain

1 A) competitive parity should not persist; why they should.

2 B) competitive advantages should persist; when they can.

3 C) competitive advantages should persist; why they should not.

4 D) competitive advantages should not persist; when they can.

High quality objectives are those that are

1 A) difficult to track over time.

2 B) tightly connected to elements of a firm's mission.

3 C) not quantitative.

4 D)difficult to measure.

The mission statements of visionary firms

1 A) suggest that profit maximizing is an important corporate objective and is their primary reason of existence.

2 B) suggest that profit maximizing is their primary reason for existence.

3 C) suggest that profit maximizing, while an important corporate objective, is not their primary reason for existence.

4 D) suggest that profit maximizing is neither an important corporate objective nor their primary reason for existence.

The difference between the perceived benefits gained by a customer that purchases a firm's products or services and the full economic costs of these products or services is known as

1 A) comparative value.

2 B) accounting value.

3 C) economic value.

4 D) sustainable value.

Missions are often written down in the form of

The is the rate of return that a firm promises to pay its suppliers

of capital to induce them to invest in the firm

1 A) cost of debt

2 B) cost of parity

3 C) cost of capital

4 D) cost of advantage

The percentage of a firm's total capital that is debt times the cost of debt plus the percentage of a firm's total capital that is equity times the cost of equity is the

1 A) weighted average cost of capital.

2 B) unweighted average cost of capital.

3 C) weighted cost of capital.

4 D) average cost of capital.

Which of the following statements regarding firm mission is accurate?

1 A) While some firms have used their missions to develop strategies that create significant competitive advantages, firm missions can hurt a firm's performance as well.

2 B) It is very rare for firms to be able to use their missions to develop strategies that create significant competitive advantages, and most firm missions actually hurt their performance.

3 C) Virtually all firms have used missions to develop strategies that create

significant competitive advantages, while very few firms have used missions that can hurt their performance.

4 D) Missions tend to have very little impact on a firm's ability to create significant competitive advantages.

measures of competitive advantage compare a firm's level of return to its cost of capital instead of to the average level of return in the industry

The two types of measures of competitive advantage include

1 A) accounting measures and strategic measures.

2 B) qualitative measures and quantitative measures.

3 C) accounting measures and economic measures.

4 D) strategic measures and economic measures.

90 Free Test Bank for Concepts Strategic

Management and Competitive Advantage 3rd Edition Barney Multiple Choice Questions - Page 2

If the risk free rate of return is 4%, the market rate of return is 9%, and a firm's beta is 2.0, what is the firm's cost of equity?

A firm that earns its cost of capital is said to be earning

1 A) above normal economic performance.

2 B) normal accounting performance.

3 C) below normal economic performance.

4 D) normal economic performance.

The values, beliefs and norms that guide behavior in society are known as

1 A) culture.

2 B) economics.

3 C) climate.

4 D) demographics.

When activity in an economy is relatively low for a short period of time, the economy is said to be in a

1 A) depression.

2 B) boom.

3 C) prosperous cycle.

4 D) recession.

If a firm has total assets of $10 million, stockholder's equity of $6 million,

a cost of equity of 10, and an after tax cost of debt of 5%, what is the firm's Weighted Average Cost of Capital?

1 A) substitutes.

2 B) buyers.

3 C) complementors.

4 D) suppliers.

Green Frog is an environmentally friendly firm in the cosmetics industry that has decided to undertake a strategic planning project They want to ensure that they perform the process correctly and so intend to start the process with the first step of the strategic planning process which is

1 A) measuring performance.

2 B) setting objectives.

3 C) defining their business level strategy.

4 D) crafting a mission statement.

In a perfectly competitive industry

1 A) there are relatively few firms operating in the industry.

2 B) the products and services sold by firms in the industry are very different from each other.

3 C) it is not very costly for firms to exit the industry.

4 D) it is very costly for firms to enter the industry.

Civil wars, political coups, terrorism, wars between countries, famines, and country or regional economic recessions are all examples of which element of the general environment?

2 B) It can be very important to a new hire's career success to understand the strategies of the firm that hired them and their place in implementing these

strategies.

3 C) Studying strategy and the strategic management process can give students tools to evaluate the strategies of firms that may employ them.

4 D) All of the above.

Thermacorp's 17.3% ROE is an example of a(n) ratio

1 A) below normal economic performance.

2 B) below normal accounting performance.

3 C) above normal accounting performance.

4 D) above normal economic performance.

The realized strategy of most firms tends to be

1 A) a combination of both intended and emergent strategies.

2 B) almost exclusively a reflection of their emergent strategy.

3 C) almost exclusively a reflection of their intended strategy.

4 D) reflective of neither the firms intended nor emergent strategy.

In the S-C-P model, refers to the strategies that firms in an

in multiple markets and industries, this would be an example of which type of strategy?

1 A) Business level strategy

2 B) Functional level strategy

3 C) Corporate level strategy

4 D) Marketing strategy

Green Frog is an environmentally friendly firm in the cosmetics industry If Green Frog undertook an analysis to help it understand which of its

resources and capabilities are likely to be sources of competitive

advantage and which are less likely to sources of such advantages they would be performing a(n)

1 A) economic analysis.

2 B) internal analysis.

3 C) WACC analysis.

4 D) external analysis.

Thermacorp's cost of equity is 13.6 If the after tax cost of debt is 4.6, what

is the weighted average cost of capital?

1 A) Technological trends

2 B) Demographics

planning team had decided that financial performance is one of the

company's top priorities Which of the following is the best example of an objective the company might use to help them achieve their goal of

superior financial performance?

1 A) Increasing profitability.

2 B) Growth in earnings per share averaging 15% or better annually for the next five years.

3 C) Improving product quality every quarter.

4 D) Growing market share annually.

The view that equity holders only receive payment on their investment in a firm after all legitimate claims by a firm's other stakeholders are satisfied

is known as the view of equity holders

Thermacorp is in the heating and cooling industry and has total assets of

$20 million, with stockholders' equity of $15 million, an ROE of 17.3%, and

a firm Beta of 1.6 If the risk free rate of return is 4 and the market rate of return is 10, what is the cost of equity?

1 A) 19.6

2 B) 25.28

3 C) 13.6

4 D) 7.75

If the average ROE in the heating and cooling industry is 10.1%, and

Thermacorp's ROE is 17.3%, Thermacorp is said to have

1 A) below average economic performance.

2 B) above average economic performance.

3 C) below average accounting performance.

4 D) above average accounting performance.

90 Free Test Bank for Concepts Strategic

Management and Competitive Advantage 3rd Edition Barney Multiple Choice Questions - Page 3

exist when a firm's cost rise as a function of that firm's volume

Which of the following is the best example of forward vertical integration?

1 A) A car company opening its own chain of video rental stores.

2 B) A car company opening its own dealerships to sell its products directly to customers.

3 C) A car company opening a plant to product motorcycles.

4 D) A car dealership opening up its own automobile manufacturing plant.

Which type of competition is characterized by a small number of firms, homogeneous products and costly entry and exit?

1 A) high threat of entry.

2 B) high power of buyers.

3 C) high threat of substitutes.

4 D) high levels of rivalry.

If your customers value your products more when they have your product and another firm's product rather than when they have your product

alone, the other firm is considered to be a

1 A) rival.

2 B) substitute.

3 C) competitor.

4 D) complementor.

Firms that engage in a long, systematic phased withdrawal from an

industry, extracting as much value as possible during the withdrawal period are following a(n) strategy

1 A) niche

2 B) expansion

3 C) harvest

4 D) divestment

Which if the following attributes makes suppliers a stronger threat?

1 A) The supplier's industry is dominated by a small number of firms.

2 B) When supplies are not able to enter into and begin competing in a firm's industry.

3 C) When suppliers are threatened by substitutes.

4 D) When the product or service provided by suppliers is not highly differentiated.

Mature industries are characterized by

1 A) a decrease in the amount of international competition.

2 B) an increase in total industry demand.

3 C) a slowdown in the introduction of new products or services.

4 D) faster increases in production capacity.

In general, first-mover advantages can arise from any of these sources except

1 A) preemption of strategically valuable assets.

2 B) technological leadership.

3 C) using an imitative strategy to introduce improved versions of competitors new products.

4 D) the creation of customer switching costs.

make a wide variety of raw materials, labor and other critical assets available to firms

1 A) Rivals

2 B) Suppliers

3 C) Buyers

4 D) Substitutes

The most promising opportunity for a firm in a declining industry is to

1 A) establish itself as a first mover in the post-shakeout industry.

2 B) become a fast follower in the pre-shakeout industry.

3 C) merge with another firm.

4 D) become a market leader in the pre-shakeout industry.

Which of the following statements regarding substitutes is accurate?

1 A) In the extreme, substitutes can ultimately replace an industry's products or services.

2 B) The importance of substitutes in reducing the profit potential in a wide variety of industries is decreasing.

3 C) Substitutes place a floor on the prices firms in an industry can charge and on the profits firms in an industry can earn.

4 D) Substitutes rarely impact the profitability that firm firms in an industry can earn.

Buyers tend to have less power when

1 A) the products or services being sold to buyers are standard and not

differentiated.

2 B) a firm has only one buyer, or a small number of buyers.

3 C) they are not earning significant economic profits.

4 D) the supplies they purchase are an insignificant portion of the costs of their final products.

Overall, the average level of performance in an industry is likely to be highest when

1 A) the threat level of rivalry, substitutes and new entrants is high, but the threat level of buyers and supplies is low.

2 B) the threat level of all five forces is low.

3 C) the threat level of all five forces is high.

4 D) the threat level of rivalry, and substitutes is low, but the threat level of suppliers, buyers and new entrants is high.

A(n) is any individual, group, or organization outside a firm that seeks to reduce the level of that firm's performance

1 A) competitive advantage

2 B) environmental opportunity

3 C) environmental equalizer

4 D) environmental threat

The products or services provided by a firm's rivals meet

customer needs in ways as the product provided by the firm itself

1 A) approximately the same; different

2 B) approximately the same; the same

3 C) different; different

4 D) different; the same

The major opportunity facing firms in fragmented industries is

1 A) refining their current products and emphasizing an increase in service quality.

2 B) the implementation of strategies that began to consolidate the industry into a smaller number of firms.

3 C) developing new products and technologies.

4 D) creating a first mover advantage through technological leadership.

The products or services provided by a firm's substitutes meet customer needs in ways as the product provided by the firm itself

1 A) different; different

2 B) different; the same

3 C) approximately the same; the same

4 D) approximately the same; different

Industries in which a large number of small or medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies are called industries

1 A) declining

2 B) emerging

3 C) fragmented

4 D) mature

Rivalry tends to be high when

1 A) when production capacity can be added in small increments.

2 B) there are few firms in an industry and these firms tend to be unequal in size.

3 C) firms are unable to differentiate their products.

4 D) the industry growth rate is higher.

Firms that have either recently begun operations in an industry or that threaten to being operations in an industry soon are considered to be in the five forces framework

1 A) Products are highly differentiated in the industry.

2 B) The existence of economies of scale in the industry.