Skip to content

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

The board of a Chennai-based auto-components firm is deciding whether to enter electric-vehicle parts, which will commit large funds for many years, affect the whole organisation and be difficult to reverse. Which characteristic of strategic decisions is MOST directly highlighted by the difficulty of reversing the decision?

The characteristic highlighted is that strategic decisions are largely irreversible. Heavy, long-term commitment of resources in a new business area makes it costly or impractical to withdraw, unlike routine, functional or short-term decisions, which are easily changed and carry limited organisation-wide consequences.

  1. AStrategic decisions are mostly routine
  2. BStrategic decisions are irreversible in natureCorrect
  3. CStrategic decisions are taken only at the functional level
  4. DStrategic decisions involve only short-term outcomes

Explanation

Large resource commitments over long periods make strategic decisions hard to undo, so they are said to be irreversible or have major resource implications. Routine, functional-level or short-term descriptions contradict the nature of strategic decisions, which are non-routine, taken by top management and long-term.

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