Question 1

Diversification is an example of a corporate retrenchment strategy.

Accepted Answer

Diversification is a corporate growth strategy, not a retrenchment strategy. Retrenchment strategies include liquidation, divestment, turnaround, and restructuring.

Question 2

Heavy investment in ________ will help take advantage of the market's growth and help maintain high market share.
A) cash cows
B) stars
C) question marks
D) dogs

Accepted Answer

Heavy investment in stars is recommended as they have high growth potential and can become cash cows in the future. This will also help maintain or increase market share. Investment in cash cows is not necessary as they already have a large market share and generate high profits. Investment in question marks and dogs may not be profitable as the former may or may not become successful and the latter may not have any growth potential.

Question 3

When a totally new product, such as laser discs years ago, is introduced, it would be considered a ________ according to the BCG matrix.
A) star
B) cash cow
C) question mark
D) dog

Accepted Answer

A totally new product with no established market share and uncertain future potential would be classified as a question mark (also known as a "problem child" or "wildcat"). The BCG matrix is a tool used to analyze a company's product portfolio and make strategic decisions based on the product's market share and growth potential. Stars are products with high market share and high growth potential, cash cows are products with high market share but low growth potential, and dogs are products with low market share and low growth potential.

Question 4

________ should be sold off or liquidated as they have low market share and low growth potential.
A) Cash cows
B) Stars
C) Question marks
D) Dogs

Accepted Answer

Dogs have low market share and low growth potential, indicating that they may not be profitable in the long term. It is therefore advisable to sell them off or liquidate them to free up assets for investment in higher potential areas.

Question 5

During the Great Recession, Malcolm's Racing Bikes lost a considerable amount of its business because customers could no longer afford the expensive models in his shop. He was very near bankruptcy. Malcolm began carrying a line of less expensive bikes to appeal to recreational bicyclists and families and also opened a repair service. Malcolm used a ________ strategy.
A) retrenchment
B) diversification
C) turnaround
D) reorganization

Accepted Answer

Malcolm used a turnaround strategy, which involves making changes to a struggling business in order to return it to profitability. By carrying a line of less expensive bikes and opening a repair service, Malcolm was able to appeal to a new customer base and increase his revenue.

Question 6

In the BCG matrix, a ________ enjoys a high anticipated growth rate and a high market share.
A) question mark
B) star
C) cash cow
D) dog

Accepted Answer

A star is a product or business unit that has a high market share in a high-growth market. The star requires investment to maintain its growth rate but also generates cash, making it a valuable asset for the company.

Question 7

When a firm integrates backward, it becomes its own distributor.

Accepted Answer

Backward integration means a company acquires or merges with companies behind its supply chain, such as suppliers of raw materials, not distributors which would be forward integration.

Question 8

________ strategies address declining performance through retrenchment and turnaround strategies.
A) Renewal
B) Stability
C) Growth
D) Functional

Accepted Answer

Renewal strategies focus on reversing declining performance through retrenchment (cutting costs and selling assets) and turnaround (restructuring and reorganizing) strategies. Stability strategies aim to maintain a steady level of performance, while growth strategies involve expanding the business. Functional strategies focus on improving the performance of specific business functions. Therefore, A is the best choice as it directly addresses declining performance.

Question 9

Corporate strategies determine what business a company is in or wants to be in, and what it wants to do with those businesses.

Accepted Answer

Corporate strategies are designed to identify the business or businesses a company wants to be in, and determine what it wants to achieve with those businesses.

Question 10

A ________ strategy is used to deal with minor performance problems. It helps an organization stabilize operations, revitalize organizational resources and capabilities, and prepare to compete once again.
A) turnaround
B) stability
C) renewal
D) retrenchment

Accepted Answer

The answer of A ________ strategy is used to deal...

Question 11

In the BCG matrix, a ________ has a low anticipated growth rate and a low market share.
A) question mark
B) cash cow
C) dog
D) star

Accepted Answer

In the BCG matrix, a dog has a low anticipated growth rate and a low market share. Dogs are products or services that have a low market share in a low-growth market, which makes it difficult for them to generate profits or have significant growth potential. Therefore, they are not considered a good investment and businesses may choose to discontinue or divest from them.

Question 12

If Burger King were to buy out Mom and Pop's Burgers, Burger King would be growing by vertical integration.

Accepted Answer

This scenario describes horizontal integration, where a company acquires or merges with a competitor in the same industry, increasing its market share. Vertical integration involves acquiring a company that operates in the supply chain of the acquiring company's industry.

Question 13

Which one of the following provides a framework for understanding diverse businesses and helps managers establish priorities for allocating resources?
A) a differentiation matrix
B) a competitive strategy
C) a corporate portfolio matrix
D) a business unit matrix

Accepted Answer

A corporate portfolio matrix provides a framework for understanding diverse businesses and helps managers establish priorities for allocating resources. It involves categorizing a firm's various businesses based on their market share and market growth rates, and then determining which businesses to invest in, maintain, or divest.

Question 14

In the BCG matrix, a business unit that has a high anticipated growth rate but a low market share is known as a ________.
A) star
B) dog
C) cash cow
D) question mark

Accepted Answer

A business unit that has a high anticipated growth rate but a low market share is known as a question mark in the BCG matrix. This means that it has the potential to become a star or cash cow if the company invests in it appropriately.

Question 15

In the Boston Consulting Group (BCG) matrix, a business unit that has a low anticipated growth rate but a high market share is known as a ________.
A) cash cow
B) star
C) dog
D) question mark

Accepted Answer

A business unit with a high market share but low growth rate is considered a cash cow because it generates a high amount of cash for the company without requiring much investment.

Question 16

When Stratasys began making 3D printers in 1988, the future of this new invention was unknown but expected to grow. Stratasys was one of a handful of producers of these printers. According to the BCG matrix, Stratasys was a ________.
A) cash cow
B) question mark
C) dog
D) star

Accepted Answer

Stratasys was a new entrant in the 3D printing industry, and the future of this technology was uncertain at the time of its inception. Therefore, Stratasys can be classified as a question mark according to the BCG matrix, which is used to evaluate a company's product portfolio based on market growth and market share.

Question 17

Managers should "milk" cash cows for as much as they can, limit any new investment in them, and use the large amounts of cash generated to invest in ________ and ________.
A) dogs; stars
B) cash cows; dogs
C) stars; question marks
D) question marks; dogs

Accepted Answer

The concept of the "growth-share matrix" suggests that cash cows are high-share, low-growth businesses that generate significant cash flow. Therefore, it is recommended to limit new investment in them, but to continue milking them for as much cash as possible. The cash generated should then be used to invest in higher-growth businesses, which are either stars (high-growth, high-share businesses) or question marks (low-share, high-growth businesses). Dogs are not a good investment choice as they have low-share and low-growth, and do not generate significant cash flow.

Question 18

As smartphone cameras improved, consumers turned away from traditional cameras. Polaroid lost market share and finally realized their product was no longer desired. At that point, Polaroid would be considered a ________ in the BCG matrix.
A) question mark
B) dog
C) cash cow
D) star

Accepted Answer

According to the BCG matrix, a "dog" represents a product with low market share in a low-growth market. In this scenario, the market for traditional cameras is declining, and Polaroid's product is no longer desired, resulting in low market share. Therefore, Polaroid would be considered a "dog" in the BCG matrix.

Question 19

AI Rubber is one of four suppliers of molded rubber products and has a 45% market share. The market for its products is shrinking. AI Rubber is part of a larger corporation that includes a total of seven different companies. In the BCG matrix, AI Rubber would be considered a ________.
A) star
B) cash cow
C) question mark
D) dog

Accepted Answer

AI Rubber, with a high market share (45%) in a shrinking market, fits the description of a cash cow in the BCG matrix. Cash cows are units with high market share in a slow-growing industry, generating steady cash flow.

Question 20

The tobacco market in the United States has stagnated but Altria has a 50% share of it. According to the BCG Matrix, Altria is a ________.
A) star
B) cash cow
C) question mark
D) dog

Accepted Answer

A cash cow is a business that has a high market share in a slow-growing industry. This is exactly the situation with Altria, as the tobacco market in the United States is not growing and Altria has a 50% share of it. Therefore, Altria is generating significant cash flows, making it a cash cow.

Quiz 9: Managing Strategy

Diversification is an example of a corporate retrenchment strategy.

Heavy investment in ________ will help take advantage of the market's growth and help maintain high market share.

When a totally new product, such as laser discs years ago, is introduced, it would be considered a ________ according to the BCG matrix.

________ should be sold off or liquidated as they have low market share and low growth potential.

In the BCG matrix, a ________ enjoys a high anticipated growth rate and a high market share.

When a firm integrates backward, it becomes its own distributor.

________ strategies address declining performance through retrenchment and turnaround strategies.

Corporate strategies determine what business a company is in or wants to be in, and what it wants to do with those businesses.

A ________ strategy is used to deal with minor performance problems. It helps an organization stabilize operations, revitalize organizational resources and capabilities, and prepare to compete once again.

In the BCG matrix, a ________ has a low anticipated growth rate and a low market share.

If Burger King were to buy out Mom and Pop's Burgers, Burger King would be growing by vertical integration.

Which one of the following provides a framework for understanding diverse businesses and helps managers establish priorities for allocating resources?

In the BCG matrix, a business unit that has a high anticipated growth rate but a low market share is known as a ________.

In the Boston Consulting Group (BCG) matrix, a business unit that has a low anticipated growth rate but a high market share is known as a ________.

When Stratasys began making 3D printers in 1988, the future of this new invention was unknown but expected to grow. Stratasys was one of a handful of producers of these printers. According to the BCG matrix, Stratasys was a ________.

Managers should "milk" cash cows for as much as they can, limit any new investment in them, and use the large amounts of cash generated to invest in and .

As smartphone cameras improved, consumers turned away from traditional cameras. Polaroid lost market share and finally realized their product was no longer desired. At that point, Polaroid would be considered a ________ in the BCG matrix.

AI Rubber is one of four suppliers of molded rubber products and has a 45% market share. The market for its products is shrinking. AI Rubber is part of a larger corporation that includes a total of seven different companies. In the BCG matrix, AI Rubber would be considered a ________.

The tobacco market in the United States has stagnated but Altria has a 50% share of it. According to the BCG Matrix, Altria is a ________.