Skip to content

CMA Intermediate · Operations Management and Strategic Management · Formulation and Implementation of Strategy

A diversified Indian conglomerate has grown into many unrelated businesses. Its board wants corporate headquarters to evaluate each business on return on investment, allocate capital among them, and leave day-to-day operating decisions to business heads. Which structure best fits this intent?

The strategic business unit structure fits best. Each business becomes a unit with its own profit responsibility and operating autonomy, while headquarters allocates capital and monitors returns such as ROI. Functional and simple structures suit single-business or small firms, and a geographic single-product structure ignores the conglomerate's diversification.

  1. AFunctional structure with centralised decisions
  2. BStrategic business unit (SBU) structureCorrect
  3. CSimple structure under the promoter
  4. DGeographic structure with a single product

Explanation

An SBU structure groups related businesses into units with their own strategy and profit responsibility, while corporate office allocates resources and monitors return. A functional structure suits single-business firms and would centralise operations. A simple structure fails at this scale, and a single-product geographic structure ignores the diversification.

Did you get it right without looking?

One question tells you little. A timed set on Formulation and Implementation of Strategy shows your real accuracy, how long you take and where you lose marks.

Practise Formulation and Implementation of StrategyFree diagnostic mock

More Formulation and Implementation of Strategy questions