Future Business Leaders of America (FBLA) Business Management Practice Test

What is a characteristic of a stability strategy?

1. It leads to aggressive expansion

2. It aims to reverse adverse conditions

3. It maintains the current operational level

4. It focuses on cost reduction

The correct answer is: It maintains the current operational level

A stability strategy is primarily focused on maintaining the current operational level of a company rather than pursuing aggressive expansion or making drastic changes. Organizations implement this strategy when they want to consolidate their market position and ensure that they are operating efficiently within their existing framework. Essentially, it allows a company to continue its operations without taking significant risks, which can be beneficial during periods of uncertainty or when an organization needs to strengthen its core competencies. In situations where a company is performing satisfactorily, a stability strategy enables it to sustain its current market position while possibly seeking small improvements. This is particularly relevant in industries with low growth prospects or for businesses that may not have the resources or desire to pursue more aggressive growth strategies at that time.