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

Before choosing among strategic options, an Indian pension fund manager's team ranks each option on weighted criteria such as expected return, risk, regulatory fit and cost. Which feature makes this approach a useful aid to strategic decision-making?

Weighted criteria scoring makes the basis for judgement explicit and lets managers compare options consistently. It still depends on judgemental weights and scores, offers no guarantee of success, and does not replace environmental analysis, since it is used at the evaluation stage before selection.

  1. AIt makes the judgement criteria explicit and allows options to be compared consistentlyCorrect
  2. BIt removes the need for any managerial judgement
  3. CIt guarantees that the highest-scoring option will succeed
  4. DIt replaces the need to analyse the external environment
  5. It applies only after a strategy has been implemented

Explanation

Weighted scoring clarifies criteria and weights, so options can be compared transparently. The weights and scores still rely on judgement, and a high score does not guarantee success. It complements, not replaces, environmental analysis, and is used before selection.

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