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IAI Actuarial Core Principles · Business Management · Strategy, competitive advantage, strategic decision process and PEST analysis

An Indian general insurer evaluates three strategic options using the usual criteria of suitability, acceptability and feasibility. Option X fits the company's mission and market position, and shareholders and the regulator would welcome it, but it needs actuarial and IT skills that the firm cannot hire or build within five years. Which conclusion is correct?

Option X is suitable and acceptable but not feasible. It fits the firm's mission and position and stakeholders would support it, but the firm lacks and cannot obtain the necessary skills in time, which is a resource constraint and therefore a feasibility failure.

  1. AX is suitable and acceptable but fails on feasibilityCorrect
  2. BX fails on suitability only
  3. CX fails on acceptability only
  4. DX passes all three criteria
  5. X is feasible but not suitable

Explanation

Suitability asks whether the option fits the strategic position, which it does. Acceptability concerns stakeholder reaction and return and risk, which is also satisfied. Feasibility asks whether resources and skills are available, and the missing skills mean it fails there.

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