Question 1

Phoenix, a popular coffee shop chain in North America, recently opened 400 stores to cater to its rapidly increasing number of patrons. This exemplifies ________.

Accepted Answer

Market penetration refers to a growth strategy in which a company tries to increase its market share in its existing market by selling more of its current products or services. In this case, Phoenix coffee shop chain opened 400 new stores to cater to its increasing number of patrons, which indicates a focus on expanding its customer base within the existing market. Therefore, the best answer is D) market penetration.
Product differentiation is a strategy that focuses on making a product or service appear unique and different from competitors. Product development refers to creating new products or services to offer to customers. Diversification involves expanding a business into new markets or products that are different from the company's current offerings. Market segmentation is a strategy of dividing a market into smaller groups of customers with similar needs or characteristics and targeting them with specific marketing efforts. None of these strategies accurately reflect the situation described in the question.

Question 2

Making more sales to current customers without changing a firm's products is known as ________.

Accepted Answer

Market penetration is a strategy where a company aims to increase its sales of existing products to its current customer base without changing the products themselves. This approach involves finding new ways to reach out to existing customers, such as through targeted marketing campaigns or offering loyalty programs, in order to encourage repeat purchases and increase overall sales. Market penetration is often a more cost-effective way to increase sales compared to developing new products or targeting new customers. Therefore, it is the most appropriate answer to the question asked.

Question 3

By harvesting its SBU, a company would most likely be ________.

Accepted Answer

Harvesting an SBU involves maximizing short-term cash flow from the unit without regard for its long-term future, often by reducing investment and cutting costs.

Question 4

FencePro, a local company, has developed an entirely new mounting system for chain link fences. After acquiring a distributor, FencePro now has the ability to market its products nationwide. FencePro is most likely following a ________ strategy.

Accepted Answer

Market development involves expanding into new markets with existing products. In this scenario, FencePro has developed a new mounting system for chain link fences and has acquired a distributor, which gives them the ability to market their products nationwide. This indicates that they are expanding into new markets with their existing product. Therefore, FencePro is most likely following a market development strategy. FencePro has developed a new mounting system for chain link fences, and after acquiring a distributor, it now has the ability to market its products nationwide. This indicates that FencePro is expanding its market reach, which is characteristic of a market development strategy. Market development involves expanding a company's market reach by introducing existing products or services into new markets. In this case, FencePro is introducing its existing chain link fence mounting system into new markets through nationwide distribution. Market penetration involves increasing market share in existing markets, downsizing involves reducing operations, and product adaptation and development involve modifying or creating new products, respectively. FencePro's acquisition of a distributor and ability to market its products nationwide indicates that the company is pursuing a market development strategy. Market development involves introducing existing products into new markets, and in this case, FencePro is expanding its market beyond its local area to a national level. The new mounting system for chain link fences is an existing product, and the company is looking to grow by reaching new customers in new geographic regions.

Question 5

Within a company, who is most likely to perform strategic planning?

Accepted Answer

Strategic planning is typically the responsibility of senior leaders within an organization, but it is also a collaborative process that involves input from various stakeholders across the company. Cross-functional teams of divisional managers who are close to their markets are best positioned to develop strategic plans that take into account the needs and goals of different departments and functional areas. These teams can draw on their expertise in marketing, sales, finance, and other areas to develop a comprehensive strategy that aligns with the company's overall objectives. Involving a range of stakeholders in the strategic planning process can also help to ensure buy-in and commitment to the plan, which is critical for successful implementation. While the president and vice presidents may provide overall guidance and direction for the strategic planning process, it is typically the cross-functional teams that are responsible for developing the plan itself.

Question 6

Modern strategic planning ________.

Accepted Answer

Modern strategic planning is decentralized, allowing for input and collaboration from various levels and departments within an organization to adapt to dynamic environments.

Question 7

The pharmaceuticals division of Omni Healthcare holds low market share in a high-growth market. According to the BCG matrix, the pharmaceuticals division of Omni can be classified as a ________.

Accepted Answer

The BCG matrix is a strategic tool used to analyze a company's product portfolio based on its market share and market growth rate. The four categories in the matrix are Stars, Cash Cows, Dogs, and Question Marks (also known as Problem Children).
Stars are products with a high market share in a high-growth market. Cash Cows are products with a high market share in a low-growth market. Dogs are products with a low market share in a low-growth market. Question Marks are products with a low market share in a high-growth market.
Based on the information provided, the pharmaceuticals division of Omni Healthcare holds a low market share in a high-growth market. Therefore, it can be classified as a Question Mark. A Question Mark requires further analysis to determine whether the division should be invested in to increase its market share and turn it into a Star, or whether it should be divested to focus on more profitable products. The BCG matrix is a strategic tool used to evaluate a company's product portfolio based on two dimensions: market growth rate and relative market share.
A star product has high market share in a high-growth market, indicating that it is generating significant revenue and has potential for future growth.
A cash cow product has high market share in a low-growth market, indicating that it generates steady revenue and profits but has limited potential for future growth.
A question mark (also known as a "problem child") product has low market share in a high-growth market, indicating that it has potential for growth but requires significant investment to capture that growth.
A dog product has low market share in a low-growth market, indicating that it is not generating significant revenue and has limited potential for future growth.
Based on this, the pharmaceuticals division of Omni Healthcare, which holds low market share in a high-growth market, can be classified as a question mark. This indicates that the division has potential for growth, but it requires significant investment to capture that growth. The BCG matrix is a strategic management tool used to categorize a company's business units or products based on their market share and market growth rate. The matrix consists of four categories: stars, cash cows, question marks, and dogs.
Stars are business units or products that have a high market share in a high-growth market. Cash cows are business units or products that have a high market share in a low-growth market. Dogs are business units or products that have a low market share in a low-growth market.
Question marks, also known as problem children or wildcats, are business units or products that have a low market share in a high-growth market. They require a lot of resources to maintain and increase their market share. They have the potential to become stars, but they also have the potential to become dogs if they do not succeed in increasing their market share.
Given that the pharmaceuticals division of Omni Healthcare holds low market share in a high-growth market, it can be classified as a question mark. This means that the division requires significant investment to increase its market share and become a star in the future.

Question 8

The managers of Arrow, an American retail chain, are currently reviewing new demographic markets to sell the firm's current products. This is an example of ________.

Accepted Answer

Market development refers to the process of expanding the target market for an existing product or service. In this scenario, the managers of Arrow are looking to sell their current products in new demographic markets, which is an example of market development. Market penetration refers to increasing sales of an existing product in the existing market, product development refers to creating new products for the existing market, mass marketing refers to targeting a wide range of customers with a single marketing strategy, and product adaptation refers to modifying an existing product to meet the needs of a specific market. None of these options fully describe the situation described in the question.

Question 9

The BCG matrix approach is problematic in that it ________.

Accepted Answer

The BCG matrix primarily focuses on current businesses by categorizing them into four quadrants based on market growth and market share, which can limit its effectiveness in planning for future opportunities and changes.

Question 10

Which of the following is true with regard to cash cows?

Accepted Answer

Cash cows are low-growth, high-share businesses or products that generate more cash than they consume. They are often used to finance other business units within the company, such as question marks and stars.

Question 11

Lark Inc., an American electronics company, is currently reviewing new geographical markets to sell its highly popular televisions. By 2020, it plans to open new stores across all the major South Asian cities. Lark is most likely following a ________ strategy.

Accepted Answer

Lark Inc. is expanding its existing product, televisions, into new geographical markets, which aligns with a market development strategy.

Question 12

Which of the following is true with regard to the product/expansion grid?

Accepted Answer

The product/expansion grid, also known as the Ansoff matrix, is a strategic tool used by businesses to identify growth opportunities by considering four different strategies: market penetration, market development, product development, and diversification. It does not classify SBUs into distinct categories nor does it help to analyze internal strengths and weaknesses. The product/expansion grid is focused on identifying growth opportunities, not downsizing to regain market share. It is not used for segregating customers into distinct categories either. Therefore, the correct option is B.

Question 13

Which of the following is a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification?

Accepted Answer

The product/market expansion grid, also known as the Ansoff matrix, is a portfolio-planning tool that helps companies identify growth opportunities through four different strategies:
Market penetration: increasing sales of existing products in existing markets
Market development: entering new markets with existing products
Product development: developing new products for existing markets
Diversification: entering new markets with new products
The other options listed do not relate to portfolio-planning tools for identifying growth opportunities.
A) The BCG matrix is used to analyze a company's product portfolio based on their market share and growth rate.
B) Analysis of variance is a statistical technique used to test differences between groups.
D) The Harris matrix is a tool used in archaeology to organize and analyze data related to archaeological sites.
E) SWOT analysis is a tool used to evaluate a company's internal strengths and weaknesses, as well as external opportunities and threats.
Therefore, the correct answer is C) product/market expansion grid.

Question 14

The managers of Alfredo's Pizza, a popular pizzeria in New York City, have been increasingly encouraging senior citizens to visit the pizzeria's numerous outlets spread across the city. Anticipating a rise in the population of senior citizens in the area, the management of Alfredo's Pizza is seeking to tap into this promising segment that consists of retired, affluent consumers. In this instance, the managers of Alfredo's Pizza are anticipating company growth through ________.

Accepted Answer

Market development is a strategy that involves finding new markets for existing products. In this case, the management of Alfredo's Pizza is seeking to tap into a new market segment, namely senior citizens. By encouraging senior citizens to visit their outlets, they hope to attract a new customer base and increase sales. This strategy is based on the anticipation of a rise in the population of senior citizens in the area, which presents a promising opportunity for growth. Therefore, the managers of Alfredo's Pizza are anticipating company growth through market development.

Question 15

________ are a type of SBU that often require heavy investments to finance their rapid growth.

Accepted Answer

In the context of the Boston Consulting Group's (BCG) matrix, which is a widely used tool for portfolio analysis, stars are SBUs (Strategic Business Units) that have a high market share in a high-growth market. These SBUs require heavy investments to finance their rapid growth and maintain their market position, as they are expected to become cash cows in the future. In contrast, cash cows generate high profits and require low investments, while question marks require significant investments to grow their market share and become stars. Dogs and bears are not terms used in the BCG matrix.

Question 16

________ are low-growth, high-share businesses/products that need less investment to hold their market share.

Accepted Answer

Cash cows are businesses or products that have a high market share in a low-growth market. They generate significant profits and cash flows with relatively little investment required to maintain their position in the market. Cash cows are often mature products or services that have reached their peak level of growth and are no longer expanding. As a result, they require minimal investment, making them attractive to companies seeking stable, reliable sources of revenue. In contrast, stars, question marks, and dogs are all classifications used in the Boston Consulting Group (BCG) matrix, which is a tool used to analyze a company's product portfolio based on growth rate and market share. Stars are high-growth, high-share businesses/products, question marks are high-growth, low-share businesses/products, and dogs are low-growth, low-share businesses/products. Bears are not a classification used in the BCG matrix.

Question 17

The key businesses of Kimberley and Price consist of a division that produces and sells breakfast cereals and another that manufactures gardening tools. Each of these businesses is called a ________.

Accepted Answer

A strategic business unit (SBU) is a standalone unit of a larger company that operates independently and has its own set of business strategies, products, and customers. In the case of Kimberley and Price, the breakfast cereal and gardening tool businesses are distinct SBUs since they have different products and customer bases, and likely require different business strategies and approaches. Therefore, the most appropriate choice to describe these businesses is option B) strategic business unit.
Option A) market segment refers to a group of customers with similar needs or characteristics that a company targets with its products or services. While the breakfast cereal and gardening tool businesses may have different target markets, they themselves are not market segments.
Option C) question mark is a term used in portfolio analysis to refer to a business with low market share in a high-growth market. This is not relevant to the description of Kimberley and Price's businesses.
Option D) prospect refers to a potential customer or client who has shown interest in a company's products or services. This is not relevant to the description of Kimberley and Price's businesses.
Option E) product portfolio refers to the collection of products or services offered by a company. While the breakfast cereal and gardening tool businesses are both part of Kimberley and Price's product portfolio, this term does not capture the distinct nature of each business unit.

Question 18

________ are low-share business units in high-growth markets that require a lot of cash to hold their share.

Accepted Answer

In the context of the Boston Consulting Group (BCG) matrix, a "question mark" is a business unit that has a low market share in a high-growth market. These units require significant cash investments to increase their market share and become a "star" or, if unsuccessful, may become a "dog" and be phased out. Question marks have the potential to become profitable, high-share businesses, but they require careful consideration and investment to reach that stage.

Question 19

Amor, a successful brand of women's clothing, recently introduced a line of fitness equipment. This is an example of ________.

Accepted Answer

Diversification involves a company entering into a new market or industry, which is different from its core business, as Amor did by introducing fitness equipment.

Question 20

A company can ________ an SBU by selling it or phasing it out and using the resources elsewhere.

Accepted Answer

Divestment is a strategic option that allows a company to sell or phase out a business unit (SBU) that is not performing well or no longer fits with the company's overall strategy. By doing so, the company can free up resources and focus on its core competencies or invest in more promising SBUs. Divestment can also help a company to reduce costs, streamline operations, and increase profitability. Therefore, divestment is the best choice for the given scenario.
The other options, such as promoting an SBU, expanding an SBU, harvesting an SBU, or holding an SBU, do not necessarily involve selling or phasing out the SBU. Promoting an SBU refers to increasing its visibility or market share, while expanding an SBU means growing its operations or entering new markets. Harvesting an SBU involves maximizing its cash flow while minimizing investment, and holding an SBU means maintaining its current operations without significant changes. Therefore, these options are not suitable for the scenario where the company wants to sell or phase out an SBU.

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