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Ansoff & BCG Practice Question (1)

The document discusses key concepts related to the BCG Matrix and Ansoff Matrix, including definitions of cash cows, question marks, market penetration, and product development. It outlines the benefits and challenges of various product categories and growth strategies, as well as how businesses can prioritize resource allocation and plan for long-term growth. Examples illustrate how companies can implement these strategies effectively.

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arjan.dhami
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13 views4 pages

Ansoff & BCG Practice Question (1)

The document discusses key concepts related to the BCG Matrix and Ansoff Matrix, including definitions of cash cows, question marks, market penetration, and product development. It outlines the benefits and challenges of various product categories and growth strategies, as well as how businesses can prioritize resource allocation and plan for long-term growth. Examples illustrate how companies can implement these strategies effectively.

Uploaded by

arjan.dhami
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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2-mark Questions (Knowledge & Identification Focused)

1. Define the term cash cow in the context of the BCG Matrix.

ANS: A cash cow is a product that has a high market share in a market that is not
growing much. This allows for little investments to be made while still having a
good cash flow

2. Identify two characteristics of a question mark product.

ANS: A question mark product has high market share and requires lots of
investments to increase its market share

3. State one reason why a business might want to retain a dog product.

ANS: As it might be a compliment to other of the businesses products which will


then bring in more revenue

4. Define the term relative market share as used in the BCG Matrix.

ANS: It compares the products market share to the products biggest competitors

4-mark Questions (Application & Short Explanation Focused)

5. Outline the benefits of having star products in a business’s portfolio.

ANS: Star products help businesses by generating lots of revenue and having a
positive cash flow. They also improve brand strength making it easier to attract
new customers. The cash generated from star products ensured that new
products can be created and it is sure that their will be demand for these
products due to the brand having a strong reputation

6. Explain how the BCG Matrix can help a business prioritize resource allocation.

ANS: The matrix arranges products based on their market growth as well as their
market share. They are placed in categories such as Stars, question marks, cash
cows and dogs. This allows businesses to allocate resources efficiently focusing
on increasing investments.

7. Describe the challenges a business may face when managing question mark
products.

ANS: Due to question marks products requiring lots of investments but having a
low market share this makes it hard to predict if the product will do well or not.
This leads to a high chance of resources being wasted.
8. Explain how a business might turn a question mark into a star.

ANS: To increase awareness and market share, a company can invest money on
distribution, product development, and marketing. The product can go from being
a question mark to a star as it plays a big role in an expanding market. If the
market keeps expanding and the product is accepted by consumers.

9. Using an example, explain why a cash cow product is important for funding
other products.

ANS: Cash cows are able to create lots of revenue despite only having small
investments. For instance, Apple's iPhone, which is a cash cow, produces
significant revenue flows that the company can use to pay for research and
development or introduce new products fostering innovation and expansion in
other fields.

10. Explain how the position of a product in the BCG Matrix can influence
marketing strategies.

ANS: Question marks need advertising to increase their market share, stars may
need significant marketing to sustain growth. Dog items may get little marketing
or be phased out, while cash cows employ cost-effective tactics to sustain sales.
The matrix aids in customizing strategies according to market conditions and
product performance.

1. Define the term market penetration in the context of the Ansoff Matrix.

ANS: This is when a business tries to increase the sales of its products by getting
a bigger market share.

2. Identify two strategies from the Ansoff Matrix that involve entering new
markets.​
ANS: Market development and diversification

3. State one risk associated with the diversification strategy.​


ANS: The product may not sell as the business is entering a new market which it
does not no wel

4. Define the term product development according to the Ansoff Matrix.​


ANS: It is when businesses create new products to sell in its current markets in
order to meet customers needs
5. Outline how a retail company might use market development to grow its sales.​
ANS: They could grow its sales by setting up stores in new countries where they
do not have stores already. For example a clothing store in Singapore may open
some outlets in Malaysia and Indonesia in order to sell to more people. They may
even have an online store in order to sell internationally

6. Explain why diversification is generally considered the riskiest growth strategy.

ANS: Diversification is risky as businesses are entering a new market with a new
product. The businesses may not understand the market well, and therefore
products could fail. It might also be expensive making it a high chance the
business will lose money.

7. Describe how product development might benefit a company operating in a


saturated market.​
ANS: In a saturated market it is hard to gain more customers as most people
already have what they need. By developing new products companies can get
existing customers to buy again. It can also stand out from competitors and
create more interest in the brand.

8. Using an example, explain how a business could implement market


penetration.​
ANS: A coffee shop might offer discounts and loyalty cards to encourage current
customers to buy more often. They can have more ads be put up in order to
become more known. This helps them get a bigger share of the existing market.

9. Explain how the Ansoff Matrix can assist a business in planning for long-term
growth.​
ANS: It helps a business see different ways it can grow such as creating new
products or entering new markets. It also shows the different risks the business
takes so the business can choose the best strategy. It’s useful for setting long
term goals and deciding where to invest resources.

10. Using a real or fictional company, describe how it might apply two different
strategies from the Ansoff Matrix.

ANS: For example, Nike could use product development by releasing new smart
running shoes that track performance. This targets their current market of
athletes. This also allows them to use market development by opening stores in
new countries where they do not have that many stores.
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