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

Ruchi Beverages Ltd. introduced a strategy of cutting costs by 8%. The management compares the actual cost reductions with the target every month, and also reviews whether the strategy was suitable for the firm's changed market. Which statement correctly describes strategic evaluation?

Strategic evaluation compares actual performance with targets and also reviews the underlying bases of the strategy, then triggers corrective action when needed. It is continuous rather than one-off, uses both financial and non-financial measures, and covers internal and external factors, so it is not just vision setting.

  1. AIt is done only once at the end of the planning period and covers financial figures alone
  2. BIt compares actual performance against targets and reviews the underlying strategy, taking corrective action where neededCorrect
  3. CIt is the same as formulating the vision statement
  4. DIt only checks the external environment, never internal performance

Explanation

Strategic evaluation is a continuing process of reviewing the bases of strategy, measuring performance against standards and taking corrective action. It is not limited to year-end or financial data, and it is distinct from vision setting. It covers both internal and external factors.

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