Question 1

An SBU can be a company division or a product line within a division, but not a single product or brand.

Accepted Answer

An SBU (Strategic Business Unit) can indeed be a single product or brand, as it represents a unit within the firm that has its own strategy and operates as an independent business.

Question 2

Under Armour increasing its advertising spending and offering an ever-increasing range of styles and colors in its original apparel line is an example of a ________ strategy.

Accepted Answer

Market penetration strategy involves increasing sales of existing products in existing markets. Under Armour increasing its advertising spending and offering different styles and colors in its original apparel line help to increase its sales in the existing market, which makes it an example of a market penetration strategy.

Question 3

Ainsworth is a toy manufacturer based in Australia. Which of the following most likely indicates that Ainsworth is following a diversification strategy?

Accepted Answer

Diversification strategy involves entering into a new market or industry which the company is not currently in, while also creating a new product for that new market. Choice D, where Ainsworth enters the U.S. market with a line of children's clothing, indicates a move into a new product category (children's clothing) and potentially a new market (U.S.), which aligns with a diversification strategy.

Question 4

P&G's decision to eliminate dozens of major brands from its portfolio including Crisco, Folgers, and Jif to focus on household care, beauty, and grooming products is an example of ________.

Accepted Answer

Pruning is the process of removing unprofitable and non-core brands or products from a company's portfolio to focus on the more profitable and promising ones. P&G's decision to eliminate dozens of major brands from its portfolio is an example of pruning.

Question 5

A strategy for company growth through starting up or acquiring businesses outside the company's current products and markets is called ________.

Accepted Answer

Diversification involves expanding a company's business by starting up or acquiring businesses outside of the company's current products and markets. This can potentially lead to increased revenue and profit by tapping into new customer segments and industries. Vertical integration involves acquiring or creating businesses within the same industry supply chain, while market development, product development, and market penetration involve expanding within the company's current markets and products.

Question 6

________ refers to reducing the business portfolio by abandoning products that no longer fit the company's overall strategy.

Accepted Answer

Downsizing refers to the process of reducing the business portfolio by abandoning products, services, or business units that are no longer profitable or do not fit the company's overall strategy. This can involve layoffs, restructuring, or divestitures to streamline operations and focus on core strengths.

Question 7

A firm's decision to identify and develop new markets for existing products is a ________ strategy.

Accepted Answer

Market development strategy involves identifying and developing new markets for existing products. This could involve finding new uses for the products or tapping into new segments of consumers who have not yet been targeted. Therefore, the best choice in this case is option A.

Question 8

EcoBean, a chain of cafes, has introduced a Special Shopper Card that allows customers to pay in advance for coffee and snacks. This effort by EcoBean management is most likely an example of ________.

Accepted Answer

EcoBean's introduction of a Special Shopper Card that allows customers to pay in advance for coffee and snacks is most likely an example of market penetration. Market penetration involves increasing sales of existing products in existing markets, which EcoBean is doing by providing a new payment option for their customers. The other options (market development, product development, diversification, and product adaptation) involve expanding into new markets or developing new products, which is not evident from the given information.

Question 9

Both market penetration strategies and market development strategies primarily involve ________.

Accepted Answer

Both market penetration and market development strategies involve selling a company's current products, with market penetration focusing on increasing sales in existing markets and market development targeting new markets.

Question 10

Under Armour's decision to add athletic shoes to its apparel line in 2006 is an example of a ________ strategy.

Accepted Answer

Under Armour's decision to add athletic shoes to its existing apparel line represents a product development strategy, as they are introducing new products to their existing market.

Question 11

A strategy for company growth that involves increasing sales to current market segments without changing the product is known as ________.

Accepted Answer

Market penetration is the process of increasing sales of existing products to existing markets. This strategy aims to increase market share and customer base without introducing new products or services.

Question 12

The growth rate of a strategic business unit that is classified as a star remains constant over time.

Accepted Answer

The growth rate of a strategic business unit that is classified as a star is expected to eventually slow down as competition increases and the market matures. While stars initially experience high growth due to their strong market position, they may eventually become cash cows as their growth rate slows and they generate significant profits. Therefore, the growth rate of a star is not necessarily constant over time.

Question 13

BlueBear is a shoe manufacturer based in the United States. Which of the following indicates that the company is following a market development strategy?

Accepted Answer

Market development strategy involves introducing existing products in new markets. BlueBear introducing its shoes in the Indian and South-East Asian markets indicates that they are following a market development strategy. The other options involve introducing new products or advertising campaigns and do not represent a market development strategy.

Question 14

When a company chooses to divest a particular strategic business unit, it ________.

Accepted Answer

When a company chooses to divest a particular strategic business unit, it means that they are selling off or phasing out that unit. Divestment is usually done when a company wants to refocus its resources on core areas of business or when a particular business unit is not performing well. It is unlikely that the company would increase advertising or invest more in a unit they have decided to divest. The company may invest just enough to keep its market share, but the ultimate goal is to sell off or phase out the unit. Increasing investment over time would not make sense if the company has already decided to divest.

Question 15

Both product development strategies and diversification strategies involve ________.

Accepted Answer

The answer of Both product development strategies and diversification strategies...

Question 16

Greyzone, a company that creates customized household furniture, is based in Terrania and is looking to enter other countries as well. The company identifies the country of Nyevka as a good option because the entry barriers for new companies are low in Nyevka. Which statement indicates that Greyzone follows a diversification strategy?

Accepted Answer

Option C indicates that Greyzone is diversifying by expanding into the production and supply of office equipment, which is a different product line than their customized household furniture. Options A, B, D, and E do not demonstrate diversification.

Question 17

ToyBox is a toy manufacturer based in the United Kingdom. Which of the following indicates that the company is following a market penetration strategy?

Accepted Answer

ToyBox acquiring toy rights for a popular cartoon character to boost its sales is a market penetration strategy because it aims to increase sales of existing products in its current market by leveraging popular characters.

Question 18

Under Armour's recent expansion into the digital personal health and fitness tracking market through acquisitions of three fitness app companies is a ________ strategy.

Accepted Answer

Diversification is the best choice because Under Armour is expanding into a new market (digital personal health and fitness tracking) that is unrelated to its current business of selling athletic and sports apparel.

Question 19

SBUs identified as cash cows need less investment than stars.

Accepted Answer

This is true. Cash cows are identified as having a high market share in a low-growth market, generating significant cash flow. As they are already established products, they require less investment in research and development or marketing than stars, which are identified as having a high market share in a high-growth market and require significant investment to grow.

Question 20

Which of the following companies is using a divesting strategy?

Accepted Answer

Blackstone is divesting, or selling off, its clothing division in response to declining sales, which is a divesting strategy. The other options describe growth or stability strategies, such as acquisitions, increased advertising, price increases, or maintaining the status quo.

Quiz 2: Company and Marketing Strategy: Partnering to Build Customer Engagement, Value, and Relationships