While Choosing an Appropriate Strategy to Establish Competitive Advantage, Management

question 28

Multiple Choice

While choosing an appropriate strategy to establish competitive advantage, management should choose an organizational strategy that:

• A) allows the organization to practice the strategy of differentiation, rather than cost leadership.
• B) try to succeed by following all strategies and trying to be all things to all people.
• C) bears consistency with the organization's mission and capitalizes on its distinctive competencies.
• D) empowers the organization to grow without creating new products or entering new markets.

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Definitions:

Plowback Ratio

The proportion of earnings retained by a company after dividends have been paid out, indicating the level of reinvestment in the business.

Required Return

The minimum expected return an investor demands for holding a particularly risky investment.

Market Capitalization Rate

An alternative term often used to refer to the cost of equity or the expected return of a market portfolio.

Plowback Ratio

A metric indicating the percentage of earnings retained by a company after dividends have been paid out to shareholders.