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CMA Intermediate · Operations Management and Strategic Management · Introduction to Strategic Management

Which one of the following best describes the nature of strategic decisions in an organisation, as distinguished from routine operational decisions?

Strategic decisions are long-term in impact, require substantial resource commitment and set the overall direction of the organisation. They are usually taken by top management and are difficult to reverse, unlike routine operational decisions, which affect day-to-day activities with limited resources.

  1. AThey are taken by supervisors and affect only daily schedules
  2. BThey are long-term in impact, need substantial resource commitment and shape the overall direction of the organisationCorrect
  3. CThey are reversible at negligible cost and involve minor resources
  4. DThey deal only with compliance with statutory requirements

Explanation

Strategic decisions are major, long-range choices about the scope and direction of the firm and usually commit large resources and are hard to reverse. Option A and C describe operational decisions, while D is too narrow because strategy is not limited to compliance.

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