BPL 5100 Quiz 2 with Complete
Solutions Graded A+
The introduction stage is when: - Answer-- Products are ~unfamiliar~ to consumers
- Market segments are ~not well-defined~
- Product features are ~not clearly specified~
- Limited competition
Introduction stage strategies: - Answer--Develop product and get users to try it
-Generate exposure so product becomes "standard"
The growth stage is: - Answer-- Characterized by ~strong increases in sales~
- ~Attractive~ to potential competitors
- When firms can ~build brand recognition~
Growth stage strategies: - Answer-- Create branded differentiated products
- Stimulate selective demand
- Provide financial resources to support value-chain activities
The maturity stage is when: - Answer-- Aggregate industry ~demand slows~
- Market becomes ~saturated~, few new adopters
- Direct competition becomes predominant
- Marginal competitors begin to exit
Maturity stage strategies: - Answer-- Create efficient manufacturing operations
- Lower costs as customers become price-sensitive
- Adopt reverse or breakaway positioning
The decline stage is when: - Answer-- Industry sales and profits begin to fall
- Price competition increases
- Industry consolidation occurs
Decline stage strategies: - Answer-- Maintaining the product position
- Harvesting profits & reducing costs
- Exiting the market
- Consolidating or acquiring surviving firms
Diversification initiatives must create value for shareholders through: (M&A, SA & JV,
ID) - Answer-- mergers and acquisitions
- strategic alliances and joint ventures
- internal development
, synergy - Answer-business 1 plus business 2 = more than 2
Diversification can be accomplished via: (M&A, D, SA & JV, ID) - Answer-- Mergers and
acquisitions
- Divestments
- Pooling resources of other companies with a firm's own resource base through
strategic alliances and joint ventures
- Internal development through corporate entrepreneurship or new venture development
Mergers - Answer-a combination or consolidation of two firms to form a new legal entity
- on a relatively ~equal~ basis
- are relatively ~rare~
Acquisitions - Answer-involve one firm buying another either through stock purchase,
cash, or the issuance of debt
Mergers and acquisitions motives - Answer-- acquiring is faster than building
- acquiring valuable resources can expand product offerings and services and/or enter
new market segments
- can consolidate an industry, forcing other players to merge
Mergers and acquisitions help a firm develop synergy: - Answer-- leveraging core
competencies
- sharing activities
- building market power
Mergers and acquisitions limitations - Answer-- High takeover premiums for acquisitions
- Competing firms can imitate advantages
- Competing firms can copy synergies
- Managers' egos get in the way of sound business decisions
- Cultural issues may doom the intended benefits
Divestment objectives include: - Answer-- Cutting the financial losses of a failed
acquisition
- Redirecting focus on the firm's core businesses
- Freeing up resources to spend on more attractive alternatives
- Raising cash to help fund existing businesses
Porter's Three Generic Strategies - Answer-1. overall cost leadership
2. differentiation
3. focus
Overall cost leadership involves - Answer--Aggressive construction of efficient scale
facilities
-Vigorous pursuit of cost reductions from experience
-Tight cost and overhead control
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