Question 1

Confirmation bias occurs when the objective information cast doubt on the sales projections of a business.

Accepted Answer

Confirmation bias refers to the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses, rather than objectively considering all information.

Question 2

An exit decision should be considered if the market demand, competitive intensity, or strategic fit is regarded unfavorably.

Accepted Answer

If any of these factors are unfavorable, it may be necessary to consider exiting the market or industry.

Question 3

A milk or harvest strategy aims to generate cash flow by reducing investment and operating expenses to a minimum.

Accepted Answer

A milk or harvest strategy typically involves extracting as much cash flow as possible from an existing business by minimizing investment and operating costs, rather than investing heavily in growth and expansion.

Question 4

A hold strategy will be superior to a milk strategy when the market prospects and/or the business position is not as grim.

Accepted Answer

A hold strategy is typically employed when a business or market still has favorable prospects, allowing the company to maintain its current position without significant investment or divestment. This contrasts with a milk strategy, which is used when the market prospects or business position is declining, aiming to extract maximum cash flow from the investment before exiting.

Question 5

Exit strategies should be considered in all of the following situations except:
A) When the business position is weak.
B) When a firm's reputation is at stake.
C) When demand is diminishing quickly with no impending resurgence.
D) When the strategic direction of the firm has changed.

Accepted Answer

Exit strategies are typically considered in scenarios where the business is facing challenges or significant changes, such as a weak position, diminishing demand, or a change in strategic direction. A firm's reputation being at stake does not necessarily require an exit strategy; instead, it might call for reputation management or strategic realignment.

Question 6

Motivations for exiting include avoidance of drain on profits by dog businesses in portfolio and purging businesses that do not fit the strategy of the firm.

Accepted Answer

The statement accurately reflects motivations for exiting a business in a portfolio, including avoiding a drain on profits and eliminating businesses that do not align with the overall strategy of the firm.

Question 7

The GE model is less complex than the BCG model.

Accepted Answer

The GE model is actually more complex than the BCG model, as it takes into account factors such as market attractiveness and competitive strength in addition to market share and growth rate.

Question 8

A hold strategy may prevent a firm from making investments that would help retain product relevance.

Accepted Answer

A hold strategy involves maintaining the current product line and delaying investments in new products or technologies. While this can help cut costs, it also runs the risk of making the firm's products obsolete and losing relevance in the market. By delaying investments, the firm may miss opportunities to update or innovate their products to meet changing customer demands or preferences.

Question 9

Strategic brand consolidation process includes five distinct steps: identifying the relevant brand set, assessing the brands, ______________, creating a revised brand portfolio strategy and ______________.

Accepted Answer

The answer of Strategic brand consolidation process includes five distinct...

Question 10

Implementing an exit decision is often delayed by managers who attempt to turn around a struggling business.

Accepted Answer

Managers may delay implementing an exit decision because they believe they can still turn the business around and return it to profitability. However, delaying such a decision can cause further financial losses and harm to the company in the long run.

Question 11

Andy Grove made the decision to get out of memory by pretending he was a new CEO brought in from the outside.

Accepted Answer

This statement is true. Andy Grove, the former CEO of Intel, decided to shift the company's focus from memory to microprocessors by approaching the situation as if he were a new CEO hired to turn around the struggling company. This approach allowed him to make difficult decisions, such as laying off a significant portion of the memory division's employees, without being bogged down by emotional attachments or personal relationships within the company.

Question 12

____________ would be disciplined about minimizing the expenditures toward the brand and maximizing the short-term cash flow, while ___________ would sharply reduce long-term investment, but continue to support marketing and service operating areas.

Accepted Answer

The answer of ____________ would be disciplined about minimizing the...

Question 13

Biases inhibiting exit decisions are ______________ and ______________.

Accepted Answer

The answer of Biases inhibiting exit decisions are ______________ and...

Question 14

Centurion organized its brands into four groupings labeled blue, green, yellow and black.

Accepted Answer

Centurion, a brand associated with American Express, does not organize its brands into color groupings like blue, green, yellow, and black. Instead, these colors are typically associated with the various card types offered by American Express itself, such as the Blue, Green, Gold, and Platinum cards, not separate brand groupings under Centurion.

Question 15

Cash cows are units that should no longer absorb investments aimed at growing the business.

Accepted Answer

Cash cows are products, services, or business units that have a high market share in a slow-growing market. These units generate a significant amount of cash for the company, but they do not require heavy investments since they have already captured a significant market share. Therefore, the company can use this cash to invest in other units that have higher growth potential.

Question 16

Some of the conditions that favor a milking strategy include a price structure that is stable at a level that is profitable for efficient firms.

Accepted Answer

A stable price structure that allows for profitability is a key factor in favoring a milking strategy, as it incentivizes firms to maintain production levels and stay in the market for a longer period of time.

Question 17

Business portfolio analysis provides a structured way to evaluate business units on two key dimensions: the attractiveness of the market involved and the strengths of competitor's in that market.

Accepted Answer

Business portfolio analysis evaluates business units based on the attractiveness of the market involved and the strengths of the business unit itself, not the strengths of competitors.

Quiz 15: Setting Priorities for Businesses and Brandsthe Exit, Milk, and Consolidate Options