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

Kaveri Textiles, a mid-sized firm, has its Managing Director personally decide to enter the export market. The decision commits large resources over several years, is hard to reverse, and affects the whole firm. Which feature of strategic decisions is most clearly illustrated by the irreversibility and large resource commitment?

The scenario shows that strategic decisions are major long-term commitments of resources that are difficult or costly to reverse. Entering export markets affects the entire firm for years, which distinguishes it from routine, repetitive operational decisions taken at lower levels.

  1. AStrategic decisions are primarily operational and repetitive in nature
  2. BStrategic decisions are major, long-term commitments that are costly or difficult to reverseCorrect
  3. CStrategic decisions are always taken by junior supervisors
  4. DStrategic decisions concern only the internal accounting records

Explanation

Strategic decisions involve substantial resources, have long-term impact and are difficult to reverse. The description in the scenario matches this. Operational decisions are the routine, repetitive ones, so the first option is wrong.

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