Business Degree Certification Practice Test

In the context of corporate governance, what encompasses the actions and decisions made by the board of directors?

1. Corporate social responsibility

2. Crisis management

3. Corporate strategy

4. Compliance checks

The correct answer is: Corporate strategy

In the context of corporate governance, the actions and decisions made by the board of directors primarily involve overseeing and directing the corporate strategy. The board is responsible for setting the long-term vision and goals of the company, ensuring that resources are allocated effectively, and assessing the overall direction of the organization. This involves not only determining the strategic initiatives that the company will pursue but also evaluating the performance of management and holding them accountable for results. When the board engages in discussions about corporate strategy, they consider various factors, including market conditions, competitor actions, and internal capabilities. Their decisions in this area are pivotal because they set the course for the company's growth, sustainability, and competitive advantage. The other options, while relevant to corporate governance in different contexts, do not directly express the primary focus of the board's actions. For example, corporate social responsibility pertains more to ethical obligations and community engagement rather than strategic direction. Crisis management focuses on handling unforeseen events and risks rather than proactive strategy formulation. Compliance checks relate to adhering to laws and regulations, which is important but is a specific function rather than an overarching strategic decision-making role.