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CS Professional · Strategic Management and Corporate Finance · Introduction to Strategic Management

Which statement best describes a key challenge of strategic management in a not-for-profit or public-sector organisation as compared with a profit-seeking company?

The key challenge is that success cannot be judged by profit alone, and many stakeholders have differing expectations. This complicates setting and measuring objectives. It is untrue that such organisations lack stakeholders or are driven by share prices.

  1. ASuccess cannot be measured by profit alone, and multiple stakeholders with differing expectations make objectives harder to set and measureCorrect
  2. BThere are no stakeholders to be considered, so strategy is unnecessary
  3. CStrategy is fully determined by share price movements
  4. DCompetitive analysis is the only element of strategy formulation

Explanation

Such organisations pursue service or social missions, so profit is not the sole yardstick. They face varied stakeholders, making objective setting and performance measurement difficult. The other options are incorrect: stakeholders exist, and they have no share-price driver.

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