0 Key
1. The number of labor hours it takes to produce one unit of a particular product
(p. 27) declines in a predictable manner as the number of units produced increases.
Which of the following terms best expresses this idea?
A. Perceptual
maps
B. Economies of
scope
C. Learning
curves
D. Vector
analysis
Learning curves were developed to express the idea that 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.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
Peter - Chapter 01 #1
Topic: A Review of Portfolio Theory
2. On what assumption is the BCG Portfolio Model based?
(p. 28)
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.
The BCG model is based on the assumption that profitability and cash flow will be
closely related to sales volume.
AACSB: Analytic
Blooms: Understand
Level of Difficulty: 2 Medium
Peter - Chapter 01 #2
Topic: The BCG Model
,3. In the early 1990s, Dean & Summers Inc. marketed three brands of car fresheners,
(p. 28) 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?
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.
The BCG is based on the assumption that profitability and cash flow will be closely
related to sales volume. Strategic business units (SBUs) functioning in a low-
growth market are either cash cows or dogs. Coral is a cash cow since it has a high
share of the market while White Springs and Autumn Breeze are dogs since they
have a low share of the market.
AACSB: Reflective Thinking
Blooms: Apply
Level of Difficulty: 3 Hard
Peter - Chapter 01 #3
Topic: The BCG Model
,4. The cell phone market is experiencing rapid growth, but the cell phones made by
(p. 28) 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 _____.
A. do
g
B. cash
cow
C. question
mark
D. sta
r
Question marks are strategic business units (SBUs) with a low share of a high
growth market. The cell phone division of Broadwing Inc. has a low market share in
the rapid growth market of cell phones.
AACSB: Reflective Thinking
Blooms: Apply
Level of Difficulty: 2 Medium
Peter - Chapter 01 #4
Topic: The BCG Model
5. According to the BCG matrix, _____ are often market leaders, but the market they
(p. 28) are in is not growing rapidly.
A. star
s
B. question
marks
C. cash
cows
D. dog
s
According to the BCG matrix cash cows are often market leaders, but the market
they are in is not growing rapidly.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
Peter - Chapter 01 #5
Topic: The BCG Model
, 6. The BCG matrix identifies _____ as strategic business units (SBUs) that have a low
(p. 28) share of a low-growth market.
A. cash
cows
B. question
marks
C. star
s
D. dog
s
Dogs are SBUs that have a low share of a low-growth market. If the SBU has a very
loyal group of customers, it may be a source of profits and cash. Usually, dogs are
not large sources of cash.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
Peter - Chapter 01 #6
Topic: The BCG Model
7. The biotechnology industry has experienced rapid growth in recent years. One of
(p. 28) 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 _____.
A. do
g
B. cash
cow
C. question
mark
D. sta
r
In terms of the BCG Portfolio Model, Biocore's biotech division is a star. In the BCG
model, strategic business units (SBUs) are classified according to their relative
market share and the growth rate of the market the SBU is in. Stars are SBUs with
a high share of a high-growth market.
AACSB: Reflective Thinking
Blooms: Apply
Level of Difficulty: 2 Medium
Peter - Chapter 01 #7
Topic: The BCG Model
1. The number of labor hours it takes to produce one unit of a particular product
(p. 27) declines in a predictable manner as the number of units produced increases.
Which of the following terms best expresses this idea?
A. Perceptual
maps
B. Economies of
scope
C. Learning
curves
D. Vector
analysis
Learning curves were developed to express the idea that 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.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
Peter - Chapter 01 #1
Topic: A Review of Portfolio Theory
2. On what assumption is the BCG Portfolio Model based?
(p. 28)
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.
The BCG model is based on the assumption that profitability and cash flow will be
closely related to sales volume.
AACSB: Analytic
Blooms: Understand
Level of Difficulty: 2 Medium
Peter - Chapter 01 #2
Topic: The BCG Model
,3. In the early 1990s, Dean & Summers Inc. marketed three brands of car fresheners,
(p. 28) 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?
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.
The BCG is based on the assumption that profitability and cash flow will be closely
related to sales volume. Strategic business units (SBUs) functioning in a low-
growth market are either cash cows or dogs. Coral is a cash cow since it has a high
share of the market while White Springs and Autumn Breeze are dogs since they
have a low share of the market.
AACSB: Reflective Thinking
Blooms: Apply
Level of Difficulty: 3 Hard
Peter - Chapter 01 #3
Topic: The BCG Model
,4. The cell phone market is experiencing rapid growth, but the cell phones made by
(p. 28) 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 _____.
A. do
g
B. cash
cow
C. question
mark
D. sta
r
Question marks are strategic business units (SBUs) with a low share of a high
growth market. The cell phone division of Broadwing Inc. has a low market share in
the rapid growth market of cell phones.
AACSB: Reflective Thinking
Blooms: Apply
Level of Difficulty: 2 Medium
Peter - Chapter 01 #4
Topic: The BCG Model
5. According to the BCG matrix, _____ are often market leaders, but the market they
(p. 28) are in is not growing rapidly.
A. star
s
B. question
marks
C. cash
cows
D. dog
s
According to the BCG matrix cash cows are often market leaders, but the market
they are in is not growing rapidly.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
Peter - Chapter 01 #5
Topic: The BCG Model
, 6. The BCG matrix identifies _____ as strategic business units (SBUs) that have a low
(p. 28) share of a low-growth market.
A. cash
cows
B. question
marks
C. star
s
D. dog
s
Dogs are SBUs that have a low share of a low-growth market. If the SBU has a very
loyal group of customers, it may be a source of profits and cash. Usually, dogs are
not large sources of cash.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
Peter - Chapter 01 #6
Topic: The BCG Model
7. The biotechnology industry has experienced rapid growth in recent years. One of
(p. 28) 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 _____.
A. do
g
B. cash
cow
C. question
mark
D. sta
r
In terms of the BCG Portfolio Model, Biocore's biotech division is a star. In the BCG
model, strategic business units (SBUs) are classified according to their relative
market share and the growth rate of the market the SBU is in. Stars are SBUs with
a high share of a high-growth market.
AACSB: Reflective Thinking
Blooms: Apply
Level of Difficulty: 2 Medium
Peter - Chapter 01 #7
Topic: The BCG Model
