Accounting Multiple Choice Question – 30 October 2024

The Stafford is a product manufactured by Alex pic.

Lucy, the product manager for the Stafford is pleased that its dominant market share has been maintained for over five years but is concerned that market growth has now almost ceased.

The product manager does not believe that the product is worthy of any further significant financial support.

In these circumstances and in terms of the Boston Consulting Group Matrix, Lucy should be recommending which of the following strategies?

Select ONE answer:

1. Hold
2. Harvest
3. Divest
4. Build

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct == > With a high market share in a low/no growth market, the Stafford is clearly a Cash Cow. The two strategy options are Hold (which implies continuing to support the product financially to maintain its position) or Harvest (which implies running down investment in the product and just managing the product for cash flow during its final years). Lucy appears to rule out the Hold strategy (withdraw investment), hence Harvest is the key.
3. Not correct
4. Not correct

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