Skip to content

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

Sundaram Auto Parts has a corporate-level strategy of diversifying into electric components. The head of its existing brake division now prepares a plan to compete against rivals in the brake market using cost leadership. At which levels of strategy are these two decisions respectively made?

Diversification into new product areas is a corporate-level strategy because it decides the portfolio of businesses. Competing in the brake market through cost leadership is a business-level strategy, as it concerns how one business competes. Functional strategy covers departmental plans and is not involved here.

  1. ACorporate level for diversification; business level for the cost leadership planCorrect
  2. BFunctional level for diversification; corporate level for the cost leadership plan
  3. CBusiness level for diversification; functional level for the cost leadership plan
  4. DCorporate level for both decisions

Explanation

Deciding which businesses to be in, such as diversifying, is a corporate-level matter. How to compete within one business, such as using cost leadership in brakes, is a business-level (SBU) matter. Functional level deals with departmental policies like marketing or production, which is not what is described.

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