A firm's _____ is defined as its theory about how to gain competitive advantages

The answer here is "D", strategy, i.e. A firm's strategy is defined as its theory about how to gain competitive advantage.

The word strategy has been derived from military services and has originated from the Greek word 'strategos' which means generalship. In military terms, strategy means an are of disposing of the instrument of warfare upon the enemy. But from the management perspective, the term has a much broader meaning. As per Glueck, "strategy is the unified, comprehensive and integrated plan that relates the strategic advantage of the firm to the challenges of the environment and is designed to ensure that basic objectives of the enterprise are achieved through proper implementation process".

From this definition, we can clearly understand the characteristics of strategy, which are:

1. A unified comprehensive and integrated plan
2. Related to the strategic advantage of the firm
3. Takes care of the challenges of the environment
4. Proper implementation of the strategy ensures that the basic objectives are achieved

This clearly mentions that strategy is a way to gain a competitive advantage.