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CMA Intermediate · Operations Management and Strategic Management · Introduction to Strategic Management

A diversified Indian conglomerate's board is deciding whether to enter the renewable energy business, committing a large share of resources over many years. In strategic management, this decision is best classified as a:

It is a corporate-level strategic decision, because entering a new business needs heavy long-term resource commitment, is difficult to reverse, and is taken by top management, unlike routine operational or short-term tactical decisions.

  1. ACorporate-level strategic decision with long-term, irreversible resource commitmentCorrect
  2. BRoutine operational decision made by supervisors
  3. CFunctional decision limited to the production department
  4. DTactical decision with short-term and easily reversible effects

Explanation

Entering a new business involves major resource commitment, long time horizon and is hard to reverse, and it is taken by top management. These are hallmarks of a corporate-level strategic decision. Operational and tactical decisions are short-term and reversible, so they do not fit.

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