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IAI Actuarial Core Principles · Business Management · Strategy, competitive advantage, strategic decision process and PEST analysis

Narmada Pensions' board approved a strategy to become a digital-first provider. Two years later, the actuarial team still uses legacy spreadsheets, sales incentives reward only paper applications, and the IT budget is unchanged. A consultant says the problem lies in the link between formulated strategy and its execution. Which conclusion is best supported?

The functional and operational plans are not aligned with the corporate strategy, so it is not being implemented. Legacy systems, paper-based incentives and an unchanged IT budget contradict the digital-first direction. Strategy must be carried through resources and incentives at lower levels, and board approval alone does not achieve that.

  1. AThe strategy is sound in practice because the board approved it
  2. BStrategy is only about formulation, so execution is outside its meaning
  3. CFunctional and operational plans are not aligned with the corporate strategy, so the strategy is not being implementedCorrect
  4. DThe strategy has failed because digital strategies cannot succeed in pensions
  5. Only a change in external PEST factors can explain the lack of progress

Explanation

Strategy has to be translated into functional and operational plans, resources and incentives. Here systems, rewards and budgets contradict the stated direction, so implementation is lacking. Board approval alone does not make a strategy effective, and nothing shows the digital idea itself is flawed.

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