Skip to content

IAI Actuarial Core Principles · Business Management · Strategy, competitive advantage, strategic decision process and PEST analysis

The board of an Indian general insurer is considering entering the micro-insurance market. The strategy team first clarifies the objectives the company wants to achieve, then gathers information on the market, then generates alternative ways to enter. Which step should logically come immediately after generating the alternatives?

After generating alternatives, the company should evaluate them against its objectives and criteria. Only once options have been appraised can the best one be chosen, implemented and monitored. Implementation or monitoring before evaluation would skip the selection step of the rational decision process.

  1. AImplementing the preferred option across all branches
  2. BEvaluating the alternatives against the stated objectives and criteriaCorrect
  3. CMonitoring the results of the chosen option
  4. DReviewing the mission statement for the first time
  5. Communicating the final decision to policyholders

Explanation

A rational decision process runs: set objectives, gather information, generate options, evaluate options against the objectives, choose, implement, then monitor. Implementation and monitoring cannot come before a choice has been made through evaluation.

Did you get it right without looking?

One question tells you little. A timed set on Strategy, competitive advantage, strategic decision process and PEST analysis shows your real accuracy, how long you take and where you lose marks.

Practise Strategy, competitive advantage, strategic decision process and PEST analysisFree diagnostic mock

More Strategy, competitive advantage, strategic decision process and PEST analysis questions