ITPEC IP April 2025 Question 69
Which of the following is the most appropriate term that describes the case below?
“In order to achieve continuous growth, a company withdraws from business area A with stagnant sales, and puts the management resources into strengthening business area B.”
Explanation
Business strategy — deciding which business to leave and where to put the management resources is a strategic choice.
A business strategy states how the company will reach its goals: which businesses and markets to compete in, which to leave, and how to allocate limited people, money, materials and information among them. Withdrawing from stagnant business area A and concentrating resources on business area B (selection and concentration) is exactly such a decision, made to achieve the goal of continuous growth.
Answer (b)
Why not others:
- •(a) Business environment — the conditions surrounding the company, such as markets, competitors and the economy; the stagnant sales of A are part of the environment, but the decision taken in response is strategy
- •(c) Management vision — the picture of what the company wants to become in the future, not the concrete means of getting there
- •(d) Management philosophy — the company's reason for existence and its values, which change rarely and do not decide which business to exit
Key rule: Philosophy says why the company exists, vision where it wants to go, and strategy how it will get there: choosing businesses and allocating resources is strategy.
Business Strategy Management · AI-written, may contain errors
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