Question 1

In an attempt to offer better deals to customers and thereby increase its market share, Dun's Burgers integrates backward to buy out its main supplier of beef. Dun's Burgers is using which of the following strategies to attract customers?

Accepted Answer

By integrating backward and buying out its main supplier, Dun's Burgers is likely aiming to reduce costs, which aligns with a cost leadership strategy.

Question 2

An SBU with a large market share of a low-growth market is a ________.

Accepted Answer

A large market share in a low-growth market indicates that the SBU is likely generating significant profits with minimal investment in marketing and product development. This aligns with the characteristics of a cash cow, which is a product or SBU that generates high profits and cash flow but has a low growth potential.

Question 3

________ is a strategy adopted by management to increase the amount of business that an SBU is currently generating.

Accepted Answer

Growth is the strategy adopted by management to increase the amount of business that an SBU (Strategic Business Unit) is currently generating. This could involve expanding the product line, entering new markets, or increasing marketing efforts to boost sales. Differentiation, divestiture, retrenchment, and focus are other strategic options for SBUs, but they are geared towards different goals.

Question 4

Which of the following is true about the GE Multifactor Portfolio Matrix?

Accepted Answer

The GE Multifactor Portfolio Matrix is a strategic management tool used to develop an organization's strategy based primarily on market attractiveness and business strengths. It classifies businesses into categories based on market attractiveness and business strength, and provides guidance for resource allocation and portfolio management. Option A, B, and D are not true statements about the matrix, and option C is partially correct but does not completely describe the matrix's scope.

Question 5

Which strategy is an organization following when it focuses on making an organization more competitive by developing a product or products that customers perceive as being different from products offered by competitors?

Accepted Answer

The strategy of differentiating a product or service aims to develop a unique offering that customers perceive as being distinct from competitors. By doing so, the organization can increase its competitiveness in the market and potentially capture a larger share of customers who value these unique features. This strategy is known as differentiation.

Question 6

A business strategy that is generally applied to star or question mark SBUs is ________.

Accepted Answer

A growth strategy is generally applied to star or question mark SBUs because they have high market growth rates and require investment to capture market share.

Question 7

GenEx Group manufactures a variety of products for different markets. One of its SBUs, GenEx Textiles, is one of its leading revenue generators. GenEx Textiles is the leading player in the market for textiles. However, the parent company has realized that growth prospects in the textile industry is limited. The company has already exploited the market to the fullest and sustained growth in the future is unlikely. In fact, a substantial amount of the revenue generated from this textile business is used to fund other SBUs of the parent company. GenEx Textiles is an example of a ________ for the GenEx Group.

Accepted Answer

GenEx Textiles is a cash cow for the GenEx Group because it is a leading revenue generator, but the parent company realizes that growth prospects in the textile industry are limited. The company already exploits the market to the fullest, and sustained growth in the future is unlikely. Additionally, a substantial amount of the revenue generated from this textile business is used to fund other SBUs of the parent company.

Question 8

Dun's Burgers has decided to open takeaway counters across the city that will be open until 11 p.m. to cater to people who return late from work. This turns out to be an excellent strategy as Dun's becomes a hot favorite with the people who work late shifts. This is an example of ________.

Accepted Answer

Dun's Burgers is targeting a specific group of customers, those who work late shifts, by offering a service that caters to their needs, which is an example of a focus strategy.

Question 9

Which of the following strategy formulation tools outlines the primary forces that determine competitiveness within an industry and illustrates how those forces are related?

Accepted Answer

The answer of Which of the following strategy formulation tools...

Question 10

When an organization focuses on making itself more competitive by producing products more cheaply than competitors can, it is following a ________.

Accepted Answer

The organization is following a cost leadership strategy, which involves producing products more cheaply than competitors can. This is achieved through various means such as economies of scale, efficient supply chains, and cost control measures.

Question 11

An SBU with a relatively small market share of a low-growth market is a ________.

Accepted Answer

A small market share in a low-growth market indicates low potential for revenue growth, making the SBU a "dog" on the growth-share matrix. Dogs have low market share and low market growth rate, and they do not generate much cash. Therefore, they are often divested or sold if they do not have any potential for growth.

Question 12

Kreme Industries has an SBU Kreme Makeups, Inc., that offers a wide variety of makeup products and accessories for women. Although market growth rate is high, the SBU's current market share is low and it needs substantial investment. The parent company is trying to decide if Kreme Makeups has long-term sustainability before investing any more cash in it. In the context of the BCG matrix, this SBU of Kreme Industries would be classified as a ________.

Accepted Answer

Kreme Makeups, Inc. is classified as a question mark because it has a high market growth rate but a low market share. This means that it has the potential to become a star or cash cow with the right investments and strategies, but it currently requires significant resources to achieve sustainable growth.

Question 13

An SBU with a small market share of a high-growth market is a ________.

Accepted Answer

An SBU with a small market share of a high-growth market is a question mark. This means the SBU has potential for growth, but requires investment and strategic decision-making to determine whether it should be developed further or abandoned.

Question 14

The Razzmatazz Group of companies plans to launch a new flavor of crackers that is distinct and unusual. Which of the following strategies is the company following to become more competitive?

Accepted Answer

The company is following a differentiation strategy by planning to launch a distinct and unusual flavor of crackers. This strategy focuses on making products that stand out from competitors and appeal to a unique target market.

Question 15

With the GE Multifactor Portfolio Matrix, the businesses falling in the cells that form a diagonal from lower left to upper right are ________.

Accepted Answer

The GE Multifactor Portfolio Matrix evaluates business units on two dimensions: industry attractiveness and competitive strength. Businesses that fall in the diagonal from lower left to upper right are considered of medium strength. They are in a position where selective investment is advised, focusing on those with potential for growth or improvement in their competitive position.

Question 16

An SBU of FlexiTech Inc. manufactures CD drives. Although it has a large share in the market and the product makes significant profits for the company, market growth potential is limited. Under which quadrant of the BCG Growth-Share Matrix does the CD manufacturing unit fall?

Accepted Answer

The CD manufacturing unit falls under the cash cow quadrant of the BCG Growth-Share Matrix as it has a large market share and generates significant profits for the company, but the market growth potential is limited.

Question 17

Which of the following strategy formulation tools was specifically developed to expand on the BCG Growth-Share Matrix?

Accepted Answer

The GE Multifactor Portfolio Matrix was specifically developed to expand on the BCG Growth-Share Matrix. It includes additional factors such as industry attractiveness and business strengths to provide a more comprehensive analysis of a company's portfolio. A, B, C, and E are all separate strategy formulation tools that do not directly relate to expanding on the BCG matrix.

Question 18

________ is a strategy that emphasizes making an organization more competitive by targeting a particular customer.

Accepted Answer

The strategy that emphasizes making an organization more competitive by targeting a particular customer is called focus. This strategy involves concentrating on a specific customer group or market segment and tailoring the organization's products or services to meet their specific needs and preferences. This could involve offering specialized products, providing excellent customer service, or creating a unique brand image that appeals to the target customer. By focusing on a particular customer segment, the organization can differentiate itself from competitors and build a stronger customer base.

Question 19

Which of the following is true about a cash cow?

Accepted Answer

A cash cow is an SBU that has a large share of a market that is growing only slightly, but generates significant cash flow for the organization. It does not require large investments but continues to produce profits, hence the term "cash cow". Option A is incorrect because cash cows are profitable, and they do not drain off cash resources generated by other SBUs. Option B is incorrect because a cash cow typically has a large share of a market, but that market is not necessarily high-growth. Option D is incorrect because a cash cow does not typically require large amounts of cash to support growth, as it is already a significant player in its market. Option E is partially correct, as cash cows do generate large amounts of cash, but it is not always the case that management can make additional investments and earn attractive returns, as the market may not be growing rapidly enough to support expansion.

Question 20

Which of the following is true about a star SBU?

Accepted Answer

An SBU that is a star has a high share of a high-growth market, which means that it requires a large amount of cash to support its rapid and significant growth. Star SBUs are expected to generate high returns on investment in the future, but they require a lot of resources in the present to sustain their growth.

Quiz 7: Strategic Planning: Strategies, Tactics, and Competitive Dynamics