CHAPTER 2: MASTER TEST BANK

2-221 BCG BUSINESS PORTFOLIO ANALYSIS APPLICATION

Because an organization has limited influence on market growth rate, its main alternative for moving an SBU on the portfolio analysis matrix is to try to change its relative market share. The most likely way for a company to turn a “question mark” into a “star” rather than a “dog” is to

a. take cash away from it.

b. reduce advertising for it.

c. inject cash into it.

d. reduce the feature set for it.

e. decrease the market growth rate.

Apple Personal Computer Photo

2-222 BCG BUSINESS PORTFOLIO ANALYSIS: APPLE APPLICATION

Consider the photo above of Apple’s personal computers (PCs), such as the MacPro, iMac, and MacBookPro. With the arrival of tablet devices, such as Apple’s iPad in 2010, global PC industry sales slowed and then declined. However, Apple’s Macs have bucked this trend, increasing its global unit market share from 10 to 12 percent. By 2016, global PC unit sales are expected to fall dramatically due to the explosion in tablet device sales. Apple’s Mac PC SBU appears to be a __________.

a. question mark

b. star

c. hedgehog

d. cash cow

e. dog

Apple iPod Photo

2-223 BCG BUSINESS PORTFOLIO ANALYSIS: APPLE APPLICATION

Consider the photo above of Apple’s iPod. Apple entered the MP3 player market with its iPod device in 2001. Today, Apple sells four iPod product lines (classic, nano, shuffle, and touch). By 2014, Apple had a 70 percent share of this market. However, global MP3 music player unit sales over the past few years have fallen dramatically and are expected to decline further by 2016 as smartphones continue to replace MP3 devices. In addition, MP3 sales may be adversely impacted with the expected launch of wearable digital watches. Apple’s iPod SBU appears to be a __________.

a. question mark

b. star

c. hedgehog

d. cash cow

e. dog

Apple iPhone 5C Photo

2-224 BCG BUSINESS PORTFOLIO ANALYSIS: APPLE APPLICATION

Consider the photo above of Apple’s iPhone 5C. Apple launched its revolutionary iPhone in 2007, the first smartphone that used a multi-touch user interface. iPhone unit sales skyrocketed. Recently, smartphone sales have slowed as the industry moves into the maturity stage of its product life cycle. But Apple’s sales have remained strong. By 2017, the smartphone market is expected to grow at a compound annual rate of 13 percent due to dropping average smartphone prices. Apple’s iPhone had a 15 percent share of the global smartphone market in 2013—second to Samsung, whose share was 41 percent. Apple’s iPod SBU appears to be a __________.

a. question mark/star

b. raptor

c. hedgehog

d. cash cow

e. dog

Apple iPad Air Photo

2-225 BCG BUSINESS PORTFOLIO ANALYSIS: APPLE APPLICATION

Consider the photo above of Apple’s iPad Air. In 2010, Steve Jobs once again revolutionized an industry when Apple launched the iPad. Unit sales reached an astonishing 40 percent market share by 2013—leading both Samsung’s Galaxy (18 percent) and Amazon’s Kindle (4 percent). Global tablet unit sales are expected to more than double by 2016 as consumers continue to switch from desktop and laptop PCs to tablet devices, with Apple still the projected market share leader. Recently, Apple introduced the 4^th generation iPad (renamed the iPad Air) and upgraded its iPad mini. Currently, Apple’s iPad SBU appears to be a __________.

a. question mark

b. star

c. hedgehog

d. cash cow

e. dog

Kodak Digital Camera Photo

2-226 BCG BUSINESS PORTFOLIO ANALYSIS: KODAK APPLICATION

Consider the Kodak Digital Camera photo above. Despite being slow to exploit its digital camera technology, Kodak eventually did. From the early-to mid 2000s, Kodak’s digital camera SBU moved successfully from a question mark to a star, becoming the market leader by 2005. At that time, the product was then considered to be a cash cow. However, with intense competition from Japanese marketers and the arrival of smartphones such as Apple’s iPhone in 2007, Kodak’s digital camera sales fell dramatically. In early 2013, Kodak exited the consumer digital camera business. For Kodak, this SBU became a__________.

a. question mark

b. star

c. hedgehog

d. cash cow

e. dog

Kodak Picture Kiosk Photo

2-227 BCG BUSINESS PORTFOLIO ANALYSIS: KODAK APPLICATION

Consider theKodak Picture Kioskphoto above. In the late 1990s, Kodak introduced its Kodak Picture Maker, which can make prints or CDs of pictures taken with digital cameras (and now smartphones). Now in its 3^rd generation as of 2014, Kodak had over 100,000Kodak Picture Kiosks installed worldwide in over 65,000 mass merchandisers, drugstores, and other retailers, making this SBU a cash cow for Kodak. But images are increasingly being stored and shared on Facebook, Instagram, or just the capture device. If these trends continue,this could make Kodak’sPicture KiosksSBUa potential __________,according to the BCG growth-share matrix.

a. hedgehog

b. star

c. cash cow

d. lion

e. question mark or dog

2-228 BCG BUSINESS PORTFOLIO ANALYSIS COMPREHENSION

One of the strengths inherent in the use of the BCG business portfolio analysis is that it

a. is based solely on company perception rather than actual data.

b. considers all factors that might impact an SBU’s value to an organization.

c. acts as a strong motivational tool for employees in SBUs that have been labeled “dogs” or “question marks.”

d. forcesa firm to place each of its SBUs in the growth-share matrix, which in turn suggests which SBUs will be cash producers or cash users in the future.

e. identifies specific marketing strategies and marketing tactics on how to solve SBU shortcomings.

2-229 BCG BUSINESS PORTFOLIO ANALYSIS COMPREHENSION

One of the weaknesses inherent in the use of the BCG business portfolio analysis is that it

a. causes dissension between different divisions when one is labeled a “star” and another a “dog.”

b. reduces employee motivation to move a low valued SBU to a higher one.

c. considers too many SBU factors beyond market growth rate and relative market share.

d. does not require sales forecasts in order to be implemented.

e. is often difficult to obtain the needed information to correctly place SBUs in the matrix.

2-230 DIVERSIFICATION ANALYSIS KNOWLEDGE

A technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products is referred to as __________.

a. diversification analysis

b. business portfolio analysis

c. a market-product grid framework

d. synergy analysis

e. market segmentation