CA Intermediate · Financial Management and Strategic Management · Introduction to Strategic Management
Ananya Textiles of Surat has decided to enter the technical textiles segment. The board approves the decision after evaluating its long-term effect on the firm's scope, requires a large commitment of funds over several years, and recognises that reversing it would be costly. Which characteristic of strategic decisions is most directly illustrated by the difficulty of reversing the decision?
The reversal difficulty illustrates that strategic decisions are largely non-reversible and involve major resource commitment. Entering a new segment ties up funds for years and unwinding it is costly. Routine, functional-level or day-to-day features describe operational decisions, not strategic ones.
- AStrategic decisions are non-reversible and carry major resource implicationsCorrect
- BStrategic decisions are always routine and repetitive
- CStrategic decisions are taken only at the functional level
- DStrategic decisions deal only with day-to-day operations
Explanation
Strategic decisions involve heavy resource commitment and are difficult to reverse without significant cost, which is exactly what the scenario describes. The other options describe operational decisions, which are routine, taken at lower levels and deal with daily activities.
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