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

Suresh runs a mid-sized Pune auto-component firm. The board decides to enter the electric vehicle component market, which needs a major commitment of funds, is hard to reverse and affects the whole organisation for years. Which characteristic of strategic decisions is chiefly illustrated?

The scenario illustrates that strategic decisions require major resource commitment and are difficult to reverse. Entering EV components involves large funds, affects the whole firm for years and cannot easily be undone. Routine, departmental or short-term decisions are operational in nature and do not fit this situation.

  1. AStrategic decisions are rarely reversible and need major resource commitmentCorrect
  2. BStrategic decisions are routine and delegated to supervisors
  3. CStrategic decisions concern only day-to-day cash handling
  4. DStrategic decisions have only a short-term effect on one department

Explanation

The scenario stresses heavy funds, irreversibility and organisation-wide long-term impact. These are hallmark features of strategic decisions. The other options describe operational decisions and contradict the facts given.

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