Skip to content

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

The CEO of a Chennai health insurer has chosen a growth strategy after a thorough options appraisal. Six months later, claims inflation rises sharply and a rival launches a cheaper product. The board asks for a strategic decision step that would detect such departures from plan and trigger corrective action. Which is the most appropriate response within the decision process?

The board should use ongoing review and control: compare actual results with targets, test whether the original assumptions still hold, and revisit or adjust the strategy through feedback. Delaying until the budget, changing the mission or withdrawing entirely would be slow or disproportionate responses.

  1. AEstablish ongoing review and control, comparing results with targets and revisiting assumptions and the chosen strategy where neededCorrect
  2. BRepeat the original options appraisal and ignore actual results
  3. CTreat the deviations as irrelevant until the next annual budget
  4. DReplace the mission statement immediately
  5. Withdraw from all product lines to avoid further risk

Explanation

Strategic control compares performance with targets and tests whether underlying assumptions still hold, feeding back into earlier stages. Waiting for the budget is too slow. Rewriting the mission or exiting all lines is disproportionate, and ignoring results defeats the purpose of feedback.

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