When a Company Has Weaknesses Relative to Competitors Among Strategically

question 31

Multiple Choice

When a company has weaknesses relative to competitors among strategically important resources and capabilities,the appropriate strategic response is to:

• A)Invest heavy in order to upgrade weaknesses
• B)Diversify in order to find new areas of business where these resources and capabilities are unimportant to competitive advantage
• C)Outsource those activities where third parties can offer superior capabilities while positioning the business to reduce vulnerable to remaining weaknesses
• D)Employ management consultants to seek a solution.

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Definitions:

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.

Inventory

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Long-Term Construction

A method in accounting that recognizes the revenues and expenses of long-term construction projects as progress is made on the project.

Completed Contract

A method in accounting where all revenue and expenses of a contract are recognized only when the contract is completed.