Module 7 Strategy Choice

One of the steps of the SWOT Matrix is to list the firm's key external opportunities. T/F

True

The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.

True

Which strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats?

WT

In the Boston Consulting Group (BCG) Matrix, which element represents the industry growth rate in sales, measured in percentage terms?

Y-axis

In the BCG Matrix, a division with a high relative market share position in a low-growth industry can be described as a

Cash Cow

Both the Internal-External (IE) and Boston Consulting Group (BCG) Matrices are called (blank) matrices.

Portfolio

Name and briefly explain Porter's Three Tests for assessing value creation through diversification.

The Attractive Test - addresses if the new market is appealing for the company to enter in the first place. The Cost of Entry Test - evaluates if the potential profitability of the market is greater or lower than the cost of entering. If it's lower, then you shouldn't be looking to enter the market. The Better Off Test - looks to establish if the company or new unit will be better off from the diversification and thus gain some form of competitive advantage. In order to pass the test, there has to be some tangible benefit to either the existing company, acquired company, or new business unit.

Which section of the SWOT Matrix involves matching internal strengths with external opportunities?

The SO Cell

Name and explain the two dimensions of the BCG Portfolio Matrix

The first dimension looks at the products general level of growth within its market. The second dimension then measures the product's market share relative to the largest competitor in the industry.