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IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies

A case study describes Narmada Pensions, which centralised all pricing decisions at head office after several regional offices made inconsistent offers. Afterwards, quotes became consistent but regional managers complained that they lost deals because approvals were slow. Which lesson from the case best reflects the trade-off in the structure?

The lesson is that centralisation improves consistency and control but can reduce responsiveness to local conditions. Narmada gained uniform quotes yet lost deals through slow approvals, so structure choices involve trade-offs rather than guaranteed gains on both speed and consistency.

  1. ACentralisation improves consistency but can reduce responsiveness to local conditionsCorrect
  2. BCentralisation always improves both speed and consistency
  3. CDecentralisation never leads to inconsistency
  4. DStructure has no effect on decision making
  5. Slow approvals show that pricing should be abandoned

Explanation

The case shows consistency gained and speed lost, the classic centralisation trade-off. The claim that centralisation always improves both is contradicted by the slow approvals, and the other options ignore the evidence.

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