Question 1

The Growth-Share Matrix of the Boston Consulting Group suggests that the excess cash being generated by cash cows should be used to fund

Accepted Answer

The Growth-Share Matrix suggests using the cash generated by cash cows to invest in question marks, which have the potential to become stars if they gain market share.

Question 2

One limitation of portfolio analysis is that it provides an illusion of scientific rigor.

Accepted Answer

While portfolio analysis may involve quantitative calculations and data analysis, it also involves subjective judgments and assumptions. Therefore, it is not completely scientific or objective, despite its use of numbers and formulas.

Question 3

A limitation of the BCG Growth-Share Matrix is the questionable link between market share and profitability.

Accepted Answer

While the BCG Growth-Share Matrix assumes that higher market share leads to higher profitability, this link may not always hold true in reality. Other factors such as pricing strategies, production efficiencies, and competitive pressures can also impact a company's profitability, irrespective of its market share.

Question 4

What is portfolio analysis?

Accepted Answer

The answer of What is portfolio analysis?...

Question 5

According to the BCG Growth-Share Matrix,the key to success with this model is

Accepted Answer

The BCG Growth-Share Matrix is based on two factors: market growth rate and market share. Market share is a critical aspect because it helps in achieving economies of scale, learning curve, and cost benefits. Therefore, the key to success with this model is market share leadership. Companies that have a high market share enjoy a lower cost structure and higher profitability compared to those with lower market share. This ultimately shapes a company's cash flow and growth potential, positioning it in the matrix.

Question 6

Describe the four categories of the BCG Growth-Share Matrix.

Accepted Answer

The answer of Describe the four categories of the BCG...

Question 7

According to Campbell,Goold,and Alexander,when parent companies create more value than any of their rivals would if they owned the same businesses,they have

Accepted Answer

According to Campbell, Goold, and Alexander, when parent companies create more value than any of their rivals would if they owned the same businesses, they have a "parenting advantage." This concept highlights the unique value and benefits a parent company can bring to its subsidiaries, beyond what any competitor could offer if they were in control.

Question 8

According to the BCG Growth-Share Matrix,products that typically bring in far more money than is needed for maintenance of their market share are called

Accepted Answer

According to the BCG Growth-Share Matrix, products that generate high cash flows and have a large market share in a mature market are called cash cows. They require minimal investment to maintain their market share and generate excess cash that can be used to invest in other areas of the business.

Question 9

According to the BCG Growth-Share Matrix,cash cows are market share leaders typically at the growth stage of their product life cycle and are usually able to generate enough cash to maintain their high share of the market.

Accepted Answer

Cash cows are market share leaders in a mature stage of their product life cycle, generating more cash than they need to maintain their market share, not typically at the growth stage.

Question 10

Which of the following is not one of the limitations of portfolio analysis?

Accepted Answer

Portfolio analysis does not rely too heavily on objective judgments; rather, it often relies on subjective judgments, which can be a limitation.

Question 11

According to the BCG Growth-Share Matrix,those products with low market share in an unattractive industry that do not have the potential to bring in much cash are called

Accepted Answer

According to the BCG Growth-Share Matrix, products with low market share in an unattractive industry that do not have the potential to bring in much cash are called "dogs."

Question 12

The GE Business Screen is based on long-term industry attractiveness and business strength/competitive position.

Accepted Answer

The GE Business Screen is a tool used to evaluate long-term industry attractiveness and the competitive position of businesses. It is a matrix that plots a company's market position against the industry attractiveness of its business. Therefore, the statement that the GE Business Screen is based on long-term industry attractiveness and business strength/competitive position is true.

Question 13

Underlying the BCG Growth-Share Matrix is the concept of the

Accepted Answer

The answer of Underlying the BCG Growth-Share Matrix is the...

Question 14

According to the BCG Growth-Share Matrix,question marks are also known as "problem children."

Accepted Answer

According to the BCG Growth-Share Matrix, question marks are also known as "problem children" because they have low market share in a high growth market, which means they require significant investment to grow their share and may not generate enough cash flow to sustain themselves.

Question 15

A simple way to portray a corporation's portfolio of investments is by using the

Accepted Answer

The BCG Growth-Share Matrix is a widely used tool for portfolio analysis that helps corporations categorize their various investments based on two main factors: market growth rate and relative market share. This matrix divides investments into four categories: Dogs (low market share, low market growth), Cash Cows (high market share, low market growth), Question Marks (low market share, high market growth), and Stars (high market share, high market growth). By using this matrix, corporations can determine which investments in their portfolio require more or less attention, whether it's investing more resources to grow stars or divesting dogs.

Question 16

According to the BCG Growth-Share Matrix,market leaders that typically are at the peak of their product life cycle and are usually able to generate enough cash to maintain their high share of the market are called

Accepted Answer

The answer of According to the BCG Growth-Share Matrix,market leaders...

Question 17

Which of the following is not one of the limitations of the BCG Growth-Share Matrix?

Accepted Answer

The market leader is actually given the highest priority in the BCG Growth-Share Matrix as it is placed in the "cash cow" quadrant, which is considered the most desirable quadrant. Therefore, D is not a limitation of the BCG Growth-Share Matrix.

Question 18

Which of the following is not one of the advantages of portfolio analysis?

Accepted Answer

Portfolio analysis is designed to be an objective tool, but it does not inherently provide a basis for impartial objectivity. The objectivity of decisions made from portfolio analysis depends on the data and assumptions used, not the tool itself.

Question 19

According to the BCG Growth-Share Matrix,dogs should be either sold off or managed carefully for the small amounts of cash they can generate.

Accepted Answer

The BCG Growth-Share Matrix categorizes a company's products into four categories: Stars, Cash Cows, Question Marks, and Dogs. Dogs are products with low market share in a low-growth market. The recommended strategy for managing Dogs is either to divest them or to manage them for the small amount of cash they can generate.

Question 20

An example of a company that did not blindly follow the prescriptions of a portfolio model was

Accepted Answer

General Mills did not blindly follow the prescriptions of a portfolio model. The company has a long history of investing in its brands and products, and it has been successful in doing so. General Mills has a strong track record of growth and profitability, and it is one of the most successful food companies in the world.

Quiz 7: Strategy Formulation: Corporate Strategy