IPA IP 2021 Question 23
A question IPA Japan published in 令和3年度 ITパスポート試験 公開問題 問23, translated into English. ITPEC is based on the same exams.
Product portfolio management is a technique used to allocate the management resources of a company optimally, and it classifies the strategic positioning of products and services into four (4) areas on the basis of their market growth rate and their share in the market. Which of the following is the area where the market share is low but the market is growing rapidly, and a large amount of investment is needed for future growth?
Explanation
Question mark (problem child) — a low market share in a fast-growing market, where heavy investment is needed to grow.
PPM places each product or business on two axes, market growth rate and market share. Growth decides how much cash a business needs; share decides how much it earns.
Answer (d)
Why not others:
- •(a) Cash cow — a high share in a mature, low-growth market; it generates cash with little further investment
- •(b) Star — a fast-growing market too, but the share is already high, so it earns well while it absorbs investment
- •(c) Dog — a low share in a low-growth market; little is invested and withdrawal is often considered
Key rule: In PPM, market growth sets how much cash a business needs and market share how much it earns: a question mark needs much and earns little, so it must be invested in or dropped.
Business Strategy Management · AI-written, may contain errors
This question comes from the past questions IPA Japan publishes, translated into English by ITPEC Practice. ITPEC Practice is an independent study tool and is not affiliated with IPA or ITPEC. See the original paper (PDF) or Report an issue.