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

Kavya Foods' board decides to enter the ready-to-eat snacks market, commit Rs 40 crore to a new plant, and thereby change the long-term direction of the company. The decision is hard to reverse and affects the whole organisation. Which characteristic of strategic decisions does this chiefly illustrate?

The decision illustrates that strategic decisions involve major resource commitment and are not easily reversed. Entering a new market with a Rs 40 crore plant shapes the firm's long-term direction, unlike routine, supervisory or short-term operational decisions.

  1. AStrategic decisions are routine and repetitive
  2. BStrategic decisions are taken mainly at the supervisory level
  3. CStrategic decisions involve major resource commitment and are not easily reversibleCorrect
  4. DStrategic decisions have only a short-term operational effect

Explanation

The large Rs 40 crore commitment and difficulty of reversing the move are classic features of strategic decisions. Routine, supervisory-level and short-term descriptions fit operational decisions, so they are wrong.

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