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

Bharat Assure Ltd is a diversified group with a life insurer, a general insurer and an asset manager. The group board is deciding whether to sell the asset manager and use the proceeds to expand the life insurer. At which level of strategy is this decision primarily taken?

This is a corporate-level decision because it concerns the mix of businesses the group owns and how capital is allocated between them. Business unit strategy deals with competing within one market, and functional or operational strategy deals with departmental or daily activities.

  1. AFunctional level, as it concerns one department's procedures
  2. BOperational level, as it concerns daily claims handling
  3. CCorporate level, as it concerns the overall portfolio of businesses and resource allocationCorrect
  4. DBusiness unit level, as it concerns how the life insurer competes in its market
  5. Individual employee level, as it concerns personal targets

Explanation

Corporate strategy covers which businesses the group should be in and how resources are allocated among them. Selling one business and funding another is a portfolio decision. Business unit strategy would instead address how a single unit competes in its market.

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