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CA Intermediate · Financial Management and Strategic Management · Introduction to Strategic Management

Bharat Cement's board decides to build a new plant in Odisha costing a very large amount. The decision is difficult to reverse, commits major resources for many years, and affects the whole organisation's long-term direction. Which characteristic of strategic decisions does this best illustrate?

The decision illustrates that strategic decisions involve major resource commitment and are difficult to reverse. A large plant investment affects the whole organisation over many years, unlike operational decisions, which are routine, short-term and made at lower levels of management.

  1. AThey are irreversible and involve major resource commitmentCorrect
  2. BThey are operational in nature and taken at lower levels
  3. CThey deal only with day-to-day routine matters
  4. DThey have only short-term consequences

Explanation

Strategic decisions typically require large resource commitments and are hard to reverse, with long-term, organisation-wide impact. The other options describe operational decisions, which are routine, short-term and taken at lower levels, and do not fit a major plant commitment.

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