Question 1

A company has to take a decision on what should be done with one of its strategic business units (SBUs).The business strength of the SBU is medium,and the industry attractiveness is medium.According to the General Electric Portfolio Model,it would be ideal for the company to _____.
A)hold share
B)harvest
C)build share
D)divest

Accepted Answer

In the General Electric (GE) Portfolio Matrix, a business unit with medium business strength and medium industry attractiveness is typically positioned in the "hold" category. This suggests that the company should aim to maintain its current market share without aggressively investing to grow or reduce its presence. This strategy is considered appropriate for sustaining the SBU's position in the market without significant investment.

Question 2

The cell phone market is experiencing rapid growth,but the cell phones made by Broadwing Inc.have such a small market share that Broadwing is looking to sell its cell phone division.According to the BCG Portfolio Model,the cell phone division of Broadwing Inc.is an example of a _____.
A)dog
B)cash cow
C)question mark
D)star

Accepted Answer

The BCG Portfolio Model categorizes businesses into Dogs, Cash Cows, Question Marks, and Stars based on their market share and market growth rate. A Question Mark is a business with low market share in a rapidly growing market, which describes Broadwing Inc.'s cell phone division. This suggests that the division has potential for growth but requires significant investment to compete with existing market leaders.

Question 3

Which objective allows market share to decline in order to maximize earnings and cash flow and is appropriate for weak cash cows,weak question marks,and dogs?
A)Hold share
B)Harvest
C)Divest
D)Build share

Accepted Answer

The objective of harvest allows market share to decline in order to maximize earnings and cash flow. This objective is appropriate for weak cash cows, weak question marks, and dogs as it focuses on extracting as much cash as possible from these products without investing further in their growth or market share.

Question 4

Which of the following objectives seeks to increase a product's short-term cash flow without concern for the long-run impact?
A)Hold share
B)Harvest
C)Divest
D)Build share

Accepted Answer

Harvest strategy focuses on increasing a product's short-term cash flow, often at the expense of the product's long-term future. This approach is typically used for products in the decline phase of their lifecycle, where the goal is to maximize immediate profits with minimal investment.

Question 5

Which of the following observations is true of the build share objective for a strategic business unit (SBU)?
A)It sacrifices immediate earnings to improve market share and is the appropriate strategy for question marks.
B)It increases a product's short-term cash flow without concern for the long-run impact.
C)It involves selling or divesting the SBU because better investment opportunities exist elsewhere.
D)It is very appropriate for dogs and those question marks the firm cannot afford to finance for growth.

Accepted Answer

The build share objective involves sacrificing immediate earnings to improve market share and is the appropriate strategy for question marks. It aims to increase the market share of the product to secure long-term profitability.

Question 6

In the early 1990s,Dean & Summers Inc.marketed three brands of car fresheners,Coral,White Springs,and Autumn Breeze.The car freshener industry is typically described as a low-growth industry.In 1993,Dean & Summers spent $5.1 million to advertise Coral and was rewarded with sales of over $112 million.In the same year,it spent nearly $5 million marketing White Springs,but the car freshener had disappointing sales of less than $23 million.Autumn Breeze,with hardly any promotion at all,had $1.2 million in sales.According to the BCG Portfolio Model,which of the following statements about these three products best describes them?
A)Coral is a star,White Springs is a cash cow,and Autumn Breeze is a dog.
B)Coral is a cash cow,while White Springs and Autumn Breeze are both question marks.
C)Coral and White Springs are cash cows,and Autumn Breeze is a dog.
D)Coral is a cash cow,while White Springs and Autumn Breeze are both dogs.

Accepted Answer

Coral, with high sales and significant market share, is a cash cow, generating more revenue than the investment it requires. White Springs and Autumn Breeze, with disappointing sales and minimal promotion respectively, are dogs, indicating low market share in a low-growth industry.

Question 7

The number of labor hours it takes to produce one unit of a particular product declines in a predictable manner as the number of units produced increases.Which of the following terms best expresses this idea?
A)Perceptual maps
B)Economies of scope
C)Learning curves
D)Vector analysis

Accepted Answer

This concept is known as a learning curve, which reflects the decreasing amount of time (or labor hours) needed to produce each unit as production experience is gained.

Question 8

In 1997,Apex Medicals Inc.sold its chemical products division because the division was showing slow growth in a market that was rapidly expanding.Apex Medicals most likely used a _____ objective with its chemical products division.
A)hold share
B)build share
C)divest
D)harvest

Accepted Answer

The decision to sell the chemical products division indicates that Apex Medicals Inc. used a divest objective, which involves getting rid of a business unit that is not performing well or is no longer aligned with the company's strategic goals. The fact that the division was showing slow growth in a rapidly expanding market suggests that it was not contributing to the company's overall success, and divesting it was the best course of action. This objective is in contrast to hold share (maintaining a steady market share), build share (increasing market share), or harvest (maximizing short-term profits from a business unit).

Question 9

According to the BCG matrix,_____ are often market leaders,but the market they are in is not growing rapidly.
A)stars
B)question marks
C)cash cows
D)dogs

Accepted Answer

According to the BCG matrix, cash cows are often market leaders with a high market share, but the market they are in is not growing rapidly. Therefore, choice C is the correct answer. Stars are also market leaders but in a rapidly growing market, while question marks are products with low market share in a growing market, and dogs are products with low market share in a stagnant market.

Question 10

In the context of the Boston Consulting Group (BCG),the _____ includes all costs associated with a product and implies that the per-unit costs of a product should fall,due to cumulative practice,as production volume increases.
A)growth curve
B)profit curve
C)learning curve
D)experience curve

Accepted Answer

The concept of the learning curve, also known as the experience curve in the context of BCG, is the idea that as production volume increases, per-unit costs of a product should fall due to cumulative learning and practice. This is because workers become more skilled and efficient, and production processes become more streamlined. The other options, growth curve and profit curve, are not directly related to the concept of the learning/experience curve.

Question 11

According to the General Electric Portfolio Model,strategic business units (SBUs)that are high in both industry attractiveness and business strength are included in the _____.
A)yellow zone
B)blue zone
C)green zone
D)red zone

Accepted Answer

The General Electric Portfolio Model includes four zones: the green zone for SBUs with high business strength and high industry attractiveness, the yellow zone for SBUs with medium business strength and industry attractiveness, the blue zone for SBUs with high business strength but low industry attractiveness, and the red zone for SBUs with low business strength and low industry attractiveness. Therefore, the best choice is C because high industry attractiveness and business strength are included in the green zone.

Question 12

Hecter & Gable Inc.marketed three brands of fabric softeners called Charms,White Cloud,and Lavender Days in the early 1990s.The industry for fabric softeners and allied products was typically described as a low-growth industry.In 1993,Hecter & Gable spent $3.1 million to advertise Charms and was rewarded with sales of over $312 million.In that same year,it spent nearly $6 million marketing White Cloud,but the product had disappointing sales of less than $63 million.Lavender Days,with hardly any promotion at all,had $4.6 million in sales.According to the General Electric Portfolio Model,which of the following statements about these three products best describes them?
A)Charms was in the red zone,while White Cloud and Lavender Days were in the green zone.
B)In spite of the difference in sales,both White Cloud and Charms were in the yellow zone.
C)Due to the low market growth in the toilet paper industry,Charms was low in business strength.
D)White Cloud and Lavender Days were low in industry attractiveness and in business strength and were in the red zone.

Accepted Answer

The General Electric Portfolio Model evaluates business units on two dimensions: industry attractiveness and business strength. White Cloud, with high marketing spend but low sales, and Lavender Days, with minimal promotion and sales, both show low business strength. The low-growth industry indicates low industry attractiveness, placing both in the red zone.

Question 13

Which of the following is an assumption of the BCG Portfolio Model?
A)Profitability and cash flow will be closely related to sales volume.
B)Return on investment (ROI)will be directly related to sales volume.
C)Cash flow is equal to investment.
D)Investment + Cash flow = Profitability.

Accepted Answer

The assumption of the BCG Portfolio Model is that profitability and cash flow will be closely related to sales volume. It assumes that high sales volume will lead to economies of scale, higher profits, and increased cash flow.

Question 14

According to the General Electric Portfolio Model,what should an organization do with its strategic business units (SBUs)that fall into the yellow zone?
A)Hold share
B)Harvest
C)Divert
D)Divest

Accepted Answer

SBUs in the yellow zone of the General Electric Portfolio Model are considered to have medium attractiveness and medium business strength. The recommended strategy for these units is to "Hold share," meaning the organization should maintain its current market position and invest just enough to keep the SBU competitive without aggressively trying to increase its market share.

Question 15

The biotechnology industry has experienced rapid growth in recent years.One of the companies at the forefront of research on diseases and insect-resistant seeds is Biocore's biotech division.The success of this division has led to many economists calling it one of the leading firms in the market.In terms of the BCG Portfolio Model,Biocore's biotech division is a _____.
A)dog
B)cash cow
C)question mark
D)star

Accepted Answer

Biocore's biotech division is at the forefront of research and is considered one of the leading firms in the market, indicating that it has a high market share and high market growth, which is indicative of a star in the BCG Portfolio Model.

Question 16

According to the General Electric Portfolio Model,what should an organization do with its strategic business units (SBUs)that fall into the red zone?
A)Hold share and build share
B)Harvest or divest
C)Produce and divest
D)Build share and harvest

Accepted Answer

The General Electric Portfolio Model suggests that SBUs should be classified into one of four categories: stars, question marks, cash cows, and dogs. The SBUs that fall into the red zone are considered dogs, which means they have a low market share in a low-growth market. In this case, it is recommended to either harvest or divest the SBU. Harvesting means reducing investment in the SBU to maximize short-term cash flows, while divesting means selling off or closing down the SBU. Therefore, choice B is the best option.

Question 17

The BCG matrix identifies _____ as strategic business units (SBUs)that have a low share of a low-growth market.
A)cash cows
B)question marks
C)stars
D)dogs

Accepted Answer

Dogs are identified as SBUs that have a low share of a low-growth market. Cash cows have a high market share in a low-growth market, stars have a high market share in a high-growth market, and question marks have a low market share in a high-growth market.

Quiz 14: Portfolio Models

A company has to take a decision on what should be done with one of its strategic business units (SBUs) .The business strength of the SBU is medium,and the industry attractiveness is medium.According to the General Electric Portfolio Model,it would be ideal for the company to _____.

The cell phone market is experiencing rapid growth,but the cell phones made by Broadwing Inc.have such a small market share that Broadwing is looking to sell its cell phone division.According to the BCG Portfolio Model,the cell phone division of Broadwing Inc.is an example of a _____.

Which objective allows market share to decline in order to maximize earnings and cash flow and is appropriate for weak cash cows,weak question marks,and dogs?

Which of the following objectives seeks to increase a product's short-term cash flow without concern for the long-run impact?

Which of the following observations is true of the build share objective for a strategic business unit (SBU) ?

The number of labor hours it takes to produce one unit of a particular product declines in a predictable manner as the number of units produced increases.Which of the following terms best expresses this idea?

In 1997,Apex Medicals Inc.sold its chemical products division because the division was showing slow growth in a market that was rapidly expanding.Apex Medicals most likely used a _____ objective with its chemical products division.

According to the BCG matrix,_____ are often market leaders,but the market they are in is not growing rapidly.

In the context of the Boston Consulting Group (BCG) ,the _____ includes all costs associated with a product and implies that the per-unit costs of a product should fall,due to cumulative practice,as production volume increases.

According to the General Electric Portfolio Model,strategic business units (SBUs) that are high in both industry attractiveness and business strength are included in the _____.

Which of the following is an assumption of the BCG Portfolio Model?

According to the General Electric Portfolio Model,what should an organization do with its strategic business units (SBUs) that fall into the yellow zone?

According to the General Electric Portfolio Model,what should an organization do with its strategic business units (SBUs) that fall into the red zone?

The BCG matrix identifies _____ as strategic business units (SBUs) that have a low share of a low-growth market.