ACCA Strategic Professional · Strategic Business Leader · Strategic choices
Harlow Sportswear is in a mature, slow-growing domestic market where it holds a 12% share and competitors are aggressive. The board proposes cutting prices and increasing promotion to take share from rivals. Which statement best describes this strategy and a relevant implication?
This is market penetration, because Harlow is pushing existing products in its existing market. In a mature, slow-growth market, gaining share means taking it from rivals, so price cuts and promotion may provoke retaliation and reduce margins.
- AMarket penetration; it may provoke price competition and gains depend on rivals' reactions in a low-growth marketCorrect
- BMarket development; it needs new regions and so carries high risk
- CProduct development; it needs new R&D investment
- DUnrelated diversification; it spreads risk across industries
Explanation
Selling existing products in existing markets by increasing share is market penetration. In a mature market, gains come at competitors' expense and may trigger retaliation and margin erosion. The other options involve new markets or products, which are not proposed.
Did you get it right without looking?
One question tells you little. A timed set on Strategic choices shows your real accuracy, how long you take and where you lose marks.
More Strategic choices questions
- Tamarind Group is assessing where to locate production for global sales. Using Porter's diamond of national advantage, a consultant argues t…
- Tamarind Pharma is evaluating a joint venture to develop a new drug. The board wants to test acceptability by understanding how the outcome …
- Kestrel Pharma and Orion Biotech each hold complementary research skills. They create a separate jointly owned company, with each owning 50%…
- Orchard Pharma has a strong sales force serving hospitals and has developed a new generic drug that it will sell to the same hospitals. The …
- Verano Tech makes enterprise accounting software for large banks. It has just developed a cloud-based payroll module and intends to sell it …
- Halvorsen Marine, a boat builder, is considering acquiring a rival to enter the leisure yacht market. The board is checking whether the opti…