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CS Professional · Strategic Management and Corporate Finance · Analyzing the External and Internal Environment

Nirmal Auto Parts has four units. In a BCG exercise the board takes 10% market growth as the cut-off between high and low growth and 1.0 relative share as the cut-off between high and low share. Data: Unit A: growth 14%, relative share 1.6; Unit B: growth 4%, relative share 1.3; Unit C: growth 12%, relative share 0.4; Unit D: growth 3%, relative share 0.3. Which row correctly classifies A, B, C, D in that order?

The classification is A star, B cash cow, C question mark, D dog. A has high growth and high share, B low growth and high share, C high growth and low share, and D low growth and low share against the stated cut-offs.

  1. AStar, Cash cow, Question mark, DogCorrect
  2. BCash cow, Star, Dog, Question mark
  3. CStar, Cash cow, Dog, Question mark
  4. DQuestion mark, Cash cow, Star, Dog

Explanation

A: growth 14% > 10% and share 1.6 > 1, so Star. B: growth 4% < 10% and share 1.3 > 1, so Cash cow. C: growth 12% > 10% and share 0.4 < 1, so Question mark. D: growth 3% and share 0.3 are both low, so Dog. The option swapping C and D confuses growth with share.

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