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CMA Foundation · Fundamentals of Business Economics and Management · Decision-making - Types and Process

The board of Sundaram Textiles decides to enter the export market for home furnishings in Europe, committing large funds for the next ten years. Which feature most clearly marks this as a strategic decision rather than an operating decision?

The decision is strategic because it commits large resources over the long term and shapes the direction of the whole organisation. Such decisions are taken by top management and are difficult to reverse, whereas operating decisions are routine, short-term and made at lower levels.

  1. AIt is taken by a supervisor on a daily basis
  2. BIt involves long-term commitment of resources and affects the whole organisation's directionCorrect
  3. CIt follows a fixed rule book
  4. DIt can be easily reversed at low cost

Explanation

Strategic decisions are taken by top management, concern the organisation's long-term direction, and involve heavy resource commitment that is hard to reverse. The other options describe features of routine operating decisions.

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