Question 1

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 _____.

Accepted Answer

A)  dog 
B)  cash cow 
C)  question mark 
D)  star C

Question 2

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

Accepted Answer

A)  Hold share 
B)  Harvest 
C)  Divest 
D)  Build share B

Question 3

On what assumption is the BCG Portfolio Model based?

Accepted Answer

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. A

Question 4

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

Accepted Answer

A)  stars 
B)  question marks 
C)  cash cows 
D)  dogs

Question 5

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?

Accepted Answer

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.

Question 6

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

Accepted Answer

A)  Hold share and build share 
B)  Harvest or divest 
C)  Produce and divest 
D)  Build share and harvest

Question 7

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?

Accepted Answer

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.

Question 8

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

Accepted Answer

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.

Question 9

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 _____.

Accepted Answer

A)  yellow zone 
B)  blue zone 
C)  green zone 
D)  red zone

Question 10

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.

Accepted Answer

A)  hold share 
B)  build share 
C)  divest 
D)  harvest

Question 11

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?

Accepted Answer

A)  Hold share 
B)  Harvest 
C)  Divest 
D)  Build share

Question 12

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?

Accepted Answer

A)  Perceptual maps 
B)  Economies of scope 
C)  Learning curves 
D)  Vector analysis

Question 13

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

Accepted Answer

A)  cash cows 
B)  question marks 
C)  stars 
D)  dogs

Question 14

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 _____.

Accepted Answer

A)  dog 
B)  cash cow 
C)  question mark 
D)  star

Question 15

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

Accepted Answer

A)  Hold share 
B)  Harvest 
C)  Divert 
D)  Divest

Question 16

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 _____.

Accepted Answer

A)  hold share 
B)  harvest 
C)  build share 
D)  divest

Exam 14: Portfolio Models