CASE
Scenario - Darla Davidson
Darla Davidson was an executive with Digital Industries, a leading manufacturer of color televisions. She recognized that the color television market in the late 1970's was facing significant challenges. After two decades of highly successful development and marketing, the sales of color televisions had slowed and replacing older color television sets largely created her market.
-The strategy that the BCG matrix suggests that Darla should take for this SBU is
A) invest and grow.
B) liquidate while still profitable.
C) ask her astrologer for advice.
D) keep the SBU healthy and use its excess earnings to invest in other SBU's.
E) divestiture.

Question

Quizplus · Accepted Answer

The BCG matrix suggests that an SBU with excess earnings should be kept healthy and its earnings should be used to invest in other SBU's. Therefore, Darla should keep her SBU healthy and use its excess earnings to invest in other SBUs to diversify the company's portfolio and minimize risk. Divestiture or liquidation might not be the best choice since the SBU is still profitable, and investing and growing might not be feasible given the challenges faced by the color television market. Asking an astrologer for advice is not a valid business practice.

CASE Scenario - Darla Davidson