Which test evaluates whether the strategy is producing good company performance?

Which test evaluates whether the strategy is producing good company performance?

• A. The Fit Test
• B. The Competitive Advantage Test
• C. The Performance Test
• D. The Strategy Test

Answer: (C)

The key idea is measuring whether the strategy actually delivers tangible business results. A strategy isn’t judged only by how clever it sounds or how well it fits the company’s resources; it’s judged by the outcomes it produces. The Performance Test focuses on these outcomes—profitability, revenue growth, return on invested capital, market share, cash flow, and other metrics that show real company performance. If these indicators improve in line with strategic goals, the strategy is delivering good performance.

The other tests look at different angles. A fit check asks whether the strategy aligns with the firm's resources and the external environment. The competitive advantage check asks whether the strategy creates and sustains superior value relative to competitors. The strategy check examines internal coherence and feasibility of the plan. While these are important, they don’t directly answer whether the strategy is generating actual performance, which is precisely what the Performance Test measures.