Which step directly precedes Above-Average Returns?

• A. Strategy Formulation and Implementation
• B. An Attractive Industry
• C. Competitive Advantage
• D. Resources

Answer: (A)

The key idea is that above-average returns come from turning available resources and favorable industry conditions into a concrete plan and then executing it. Strategy formulation identifies how to combine and deploy those resources to compete, and implementation actually carries out those decisions across the organization. Without putting the strategy into action, the potential from resources and market conditions doesn’t translate into superior performance. Therefore, the step that directly precedes above-average returns is the process of formulating and implementing the strategy.