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CA Final · Advanced Financial Management · Financial Policy and Corporate Strategy

Hind Auto Components Ltd has a corporate-level strategy team, separate divisions for passenger-vehicle parts and tractor parts, and functional heads for production, marketing and finance. The board is now deciding whether to enter the electric-vehicle battery business and how much total capital to allocate across the two existing divisions. At which level of strategy does this decision primarily sit?

This is a corporate level strategy decision. Choosing whether to enter a new industry such as EV batteries and allocating capital across divisions defines the portfolio of businesses and resource distribution for the whole company, whereas business unit and functional strategies operate within chosen businesses.

  1. ACorporate level strategyCorrect
  2. BBusiness unit level strategy
  3. CFunctional level strategy
  4. DOperational level tactics of the plant supervisor

Explanation

Decisions about which businesses the firm should be in, entry into new industries and allocation of resources across divisions are corporate-level matters. Business unit strategy deals with competing within one chosen business. Functional strategy supports the business unit strategy through departmental policies.

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