Skip to content

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

Sundaram Pumps has a mission of being the most reliable irrigation partner for farmers. A manager proposes a new product line that earns high margins but is unreliable in field conditions. In the strategic management process, which role of a mission statement is most directly relevant in rejecting the proposal?

The mission statement acts as a filter, defining the firm's purpose, scope and values so proposals can be judged against it. An unreliable product contradicts a mission of reliability, so it is rejected. A mission does not set capital limits, sales targets or dividend payouts.

  1. AIt provides a legal ceiling on the capital the firm may raise
  2. BIt acts as a filter that defines the business's purpose and helps judge whether proposals fit its scope and valuesCorrect
  3. CIt fixes the quarterly sales targets for each region
  4. DIt states the dividend the firm must pay shareholders

Explanation

A mission defines the purpose, scope and values of the business, so it guides decisions by screening proposals that conflict with that purpose. Here an unreliable product contradicts the stated mission of reliability. It does not set capital limits, sales targets or dividends, which are other plans or financial decisions.

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