In the Industrial Organizational Model of Above Average Returns, which is the last element in the sequence?

• A. The external environment
• B. Attractive industry
• C. Strategy formulation
• D. Above-average returns

Answer: (D)

The Industrial Organization model traces a path where external factors shape industry attractiveness and structure, which then leads to strategy formulation and execution, culminating in the outcome the model aims to explain: above-average returns. In other words, external environment sets the playing field, the industry’s characteristics determine how attractive it is, strategy is the plan to compete, and the ultimate measure of success is the returns the firm earns. That makes the final element above-average returns, since all prior steps exist to produce that performance outcome. The other elements are inputs or steps in the process, not the end result.