Skip to content

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

Mehta Textiles, a Surat firm, has grown steadily through the same cloth segment for years. Its board now meets and decides to enter technical textiles through a new subsidiary, committing Rs 40 crore over five years. Which feature of strategic decisions is most clearly shown by this decision?

The decision shows that strategic decisions involve major resource commitment and are not easily reversible. A Rs 40 crore, five-year entry into technical textiles through a new subsidiary is costly to undo and affects the whole firm, unlike routine or single-department decisions.

  1. AIt is routine and can be reversed easily at low cost
  2. BIt involves major resource commitment and is not easily reversibleCorrect
  3. CIt concerns only day-to-day supervision of workers
  4. DIt affects only one functional department

Explanation

Entering a new business with a Rs 40 crore multi-year commitment is a major resource commitment that is hard to reverse, a key feature of strategic decisions. Routine, supervisory or single-department decisions do not fit this scale and scope.

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