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

Which statement about the flow of strategy across its levels is most accurate?

Corporate strategy sets the overall direction within which business-level and functional strategies are framed. Strategy is hierarchical and needs coordination across levels, so functional units do not set the corporate mission independently, and business strategies are not formed before corporate objectives or in isolation.

  1. ACorporate strategy sets the direction within which business and functional strategies are framedCorrect
  2. BFunctional strategies determine the corporate mission independently
  3. CBusiness-level strategy is formulated before corporate objectives exist
  4. DLevels of strategy operate in isolation without any coordination

Explanation

Strategy is hierarchical: corporate strategy gives overall direction, business strategies translate it into market competition, and functional strategies implement those. Coordination across levels is essential, so the other statements are incorrect.

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