Skip to content

CMA Intermediate · Operations Management and Strategic Management · Introduction to Strategic Management

Kiran Auto Components Ltd. is reviewing three activities: (i) deciding to enter the electric vehicle component market with a new plant costing a large share of its net worth, (ii) fixing this week's shift roster for the machining shop, (iii) deciding the format of monthly stores issue slips. Which statement is correct?

Only the decision to enter the electric vehicle component market is strategic, because it changes the firm's scope, commits large resources and has long-term, hard-to-reverse effects. Shift rostering and stores slip formats are routine, short-term operational matters with limited impact.

  1. AAll three are strategic because each involves the production function
  2. BOnly (i) is strategic; (ii) and (iii) are operationalCorrect
  3. COnly (ii) is strategic because it affects workers directly
  4. D(i) and (ii) are strategic; (iii) is operational

Explanation

Entering a new market with a major capital commitment changes the scope and direction of the firm and is hard to reverse, so it is strategic. Weekly rostering and slip formats are routine, short-term, low-resource decisions and therefore operational. Involvement of the production function alone does not make a decision strategic.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Strategic Management shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Strategic ManagementFree diagnostic mock

More Introduction to Strategic Management questions