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