Certified Production & Operations Manager (POM) Practice Exam

Which of the following statements is TRUE?

1. Functional strategies are shaped by corporate strategy

2. Corporate strategy and functional strategy are independent

3. Functional strategies are not affected by market conditions

4. Corporate strategy is solely focused on financial performance

The correct answer is: Functional strategies are shaped by corporate strategy

The assertion regarding functional strategies being shaped by corporate strategy is accurate. In an organization, the corporate strategy provides the overarching direction and framework within which functional strategies operate. Corporate strategy defines the overall goals and objectives of the organization, such as market positioning, resource allocation, and competitive advantage. As a result, functional strategies, which include marketing, operations, human resources, and finance, are developed to align with and support these corporate goals. This relationship is critical in ensuring that the different functions within the organization work harmoniously towards the same objectives, thereby enhancing overall performance and effectiveness. For example, if the corporate strategy dictates a focus on innovation and growth in a particular market, the functional strategies will be crafted to support this intent, such as by investing in research and development, tailoring marketing strategies, and aligning human resources with the necessary skill sets. In contrast, corporate strategy and functional strategy being independent would imply a lack of coherence between the two, which is not how effective organizations operate. Functional strategies are inherently influenced by both corporate strategy and the external market conditions, which directly affects their approach and execution. Lastly, a focus solely on financial performance misrepresents the holistic nature of corporate strategy, which includes various dimensions such as customer satisfaction, market share, and