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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Rohan Auto Components rewards its plant managers only on quarterly profit. Managers are cutting R&D and maintenance to meet targets, harming the firm's long-term strategy of technology leadership. Which strategic control observation best explains the problem?

The best explanation is that the control and reward measures are misaligned with long-term strategic goals. Rewarding only quarterly profit pushes managers to cut R&D and maintenance, which undermines the technology leadership strategy, so the control system fails to support implementation.

  1. AOperational control measures are misaligned with the long-term strategic goals being pursuedCorrect
  2. BPremise control shows the environment has not changed
  3. CSpecial alert control is being applied after a crisis
  4. DImplementation control has been correctly applied

Explanation

Short-term profit measures encourage behaviour that conflicts with the long-term technology strategy, so control and reward systems are not aligned with strategy. The scenario describes no crisis or premise check, and the control is not working correctly.

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