RX Corporation has four strategic business units (A, B, C,D). During a review meeting, a member of the company's board of directors suggests that SBU A, which is in the textile industry, should be sold off. Which of the following, if true, would strengthen the argument to eliminate SBU A from the company's portfolio?
A) SBU A requires very little financial investment.
B) The textile industry is in the maturity stage of the market.
C) SBU A was a first mover in its market.
D) The textile industry has very high barriers to exit.
E) SBU A recently underwent a rebranding exercise.

Question

Quizplus · Accepted Answer

The fact that the textile industry is in the maturity stage of the market suggests that there is limited potential for growth or innovation in the industry, making it a less attractive option for RX Corporation to hold onto. In addition, SBU A's low financial investment requirement (A) and its status as a first mover (C) could actually make it a valuable asset for the company. The fact that the textile industry has high barriers to exit (D) could make it difficult for RX Corporation to divest from SBU A if it chooses to keep it. The recent rebranding exercise (E) may have little relevance to the decision to sell off SBU A.

RX Corporation Has Four Strategic Business Units (A, B, C,D)