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

Bharat Assure sells life, health and general insurance through separate divisions. The group board is deciding whether to acquire a microfinance lender, exit the motor insurance business, and how much capital to give each division. At which level of strategy are these decisions primarily taken?

These are corporate strategy decisions. Choosing which businesses the group should operate in, acquiring or exiting them and allocating capital among divisions determines the scope of the whole organisation. Business-unit strategy, by contrast, deals with how one division competes in its own market.

  1. AFunctional strategy
  2. BOperational strategy
  3. CBusiness-unit (competitive) strategy
  4. DCorporate strategyCorrect
  5. Team-level tactics

Explanation

Decisions about which businesses to be in, acquisitions, exits and capital allocation across divisions define the scope of the whole group. This is corporate strategy. Business-unit strategy concerns how a single unit competes within its chosen market, which is not the question here.

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