ITPEC IP April 2024 Question 79
In product portfolio management, where products and business to be analyzed are classified into cash cows, stars, dogs, and question marks, which of the following is the appropriate combination of indexes used in the vertical axis and horizontal axis?
Explanation
C, D: market growth rate and market share — the two axes of the product portfolio management (PPM) matrix.
PPM (the BCG matrix) places each product or business by market growth rate on the vertical axis and relative market share on the horizontal axis. Growth shows how much investment the market demands; share shows how much cash the product earns from its position.
Answer (d)
Why not others:
- •(a) A, B — neither customer retention rate nor market size is an axis of the matrix
- •(b) A, C — market growth rate is right, but customer retention rate measures customer loyalty and is not the other axis
- •(c) B, D — market share is right, but the vertical axis is how fast the market grows, not how large it is
Key rule: PPM directs cash: harvest the cash cows (high share, slow growth) and invest the money in question marks that can become stars; withdraw from the dogs.
Business Strategy Management · AI-written, may contain errors
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