Understanding Competitive Business Strategies:
The board of directors' focus is on industry leadership and outperforming competitors.
A strong research and development (R&D) strategy drives innovation, allowing the organization to introduce new and differentiated products that enhance competitive advantage.
Why Option C (Investment in R&D) Is Correct?
R&D drives product innovation, helping the organization stay ahead of competitors.
Investing in new technologies and unique product features differentiates the company and strengthens market leadership.
IIA Standard 2120 – Risk Management supports evaluating strategic investments that enhance business growth and competitive positioning.
Why Other Options Are Incorrect?
Option A (Divesting unprofitable product lines):
While divestment improves financial health, it does not directly contribute to market leadership.
Option B (Increasing diversity of business units):
Expanding into new business areas spreads risk but may not provide a focused competitive advantage in the primary industry.
Option D (Relocating manufacturing to another country):
Lowering costs improves efficiency, but it does not directly position the company as an industry leader.
Investing in R&D aligns best with the board’s goal of industry leadership and competitive advantage.
IIA Standard 2120 supports strategic risk management and innovation investment.
Final Justification:IIA References:
IPPF Standard 2120 – Risk Management (Strategic Investment & Competitive Advantage)
COSO ERM – Business Growth & Innovation Risk Management
Porter’s Competitive Strategy Model – R&D as a Market Differentiator
