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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Anand Motors compares its production cost per unit, delivery time and defect rate against the best performer in the auto-components industry to find gaps and adopt superior practices. Later, it also reviews whether its premises, assumptions about the economy and competitor moves still hold. Which pair correctly identifies these two activities?

The activities are benchmarking and premise control. Comparing costs, delivery and defects with the best performer to find gaps is benchmarking. Rechecking whether the environmental and internal assumptions behind the strategy still hold is premise control, a form of strategic control.

  1. ABenchmarking; Strategic control through premise controlCorrect
  2. BOutsourcing; Implementation control
  3. CReengineering; Special alert control
  4. DTurnaround; Strategic surveillance only

Explanation

Comparing own performance with the best in class to close gaps is benchmarking. Checking whether the assumptions on which the strategy was based remain valid is premise control, a type of strategic control. The other pairs mislabel one or both activities, for example outsourcing means contracting out functions.

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