Page 169 - BA1 Integrated Workbook STUDENT 2018

Answers to supplementary objective test questions

CHAPTER 7 – STRATEGIC OPTIONS AND CHOICE

7.1 A

Don’t forget that a product can be differentiated by its brand name (called
intangible differentiation) – not just by actual features. In addition, while HER
does not seem to be selling its product at a premium, in some cases
differentiation is simply a way of gaining additional sales volume, rather than
commanding a higher price.

7.2 A

Strategy A is market development – XXX is selling its existing neon signs to a
new market segment.

Strategy B is market penetration – XXX is simply trying to boost the amount it
sells to its current commercial customers.

Strategy C is diversification – XXX is selling new products (neon compounds) to
a new market (chemists).

The only option missing is product development.

7.3 B, C

A double or quits strategy is usually applied to question marks/problem children
– those products or subsidiaries with low market share, but high market growth.

Only B and C fit this category within the scenario. A is a dog, D is a cash cow
and E is a star.

7.4 B

Suitability considers whether the plan is appropriate for JEF’s strategy. In this
case, a franchise option would be an appropriate way to grow the business – a
key strategy of JEF’s owner, K.

Acceptability looks at whether the proposal is likely to please the major
stakeholders. In this case, the major stakeholder is the owner, K. As it is their
idea, it is clearly acceptable to them.

There is a serious doubt over its feasibility – as a new chain it only has a local
reputation and it is unlikely franchisees could be found to pay a large sum of
money in order to buy into a relatively unknown brand name.

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