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CS Professional · Strategic Management and Corporate Finance · Introduction to Strategic Management

A family-owned Indian textile firm with a single plant is preparing its first formal strategic plan. Compared with a large diversified conglomerate, which feature is most typical of strategic management in such a small, single-business firm?

In a small single-business firm, strategy is usually driven by the owner-manager's vision, with informal and quick decision-making. Layered corporate and business plans and portfolio allocation across unrelated businesses belong to large diversified conglomerates, not to a small firm.

  1. AStrategy is closely tied to the owner-manager's vision and decisions are made informally and quicklyCorrect
  2. BStrategy is split into several independent corporate-level and business-level plans reviewed by separate boards
  3. CStrategy is mainly decided by an external committee of creditors
  4. DStrategy is limited to portfolio allocation among many unrelated businesses

Explanation

In small single-business firms, the owner-manager's vision typically shapes strategy, with informal and fast decision-making. Multi-level plans and portfolio allocation are features of large diversified groups. Creditor committees do not set ordinary strategy.

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