Chapter 02 – Corporate Strategy Decisions and Their Marketing Implications
End of Chapter Discussion Questions and Answers
1. The Kelly Bottling Company, located in a large metropolitan area of some 5 million
people, produced and marketed a line of carbonated beverages consisting mainly of
flavored soft drinks (not including colas), soda water, and tonics. They were sold in
different types of packages and sizes to a wide variety of retail accounts. How might
such a company expand its revenues by pursuing each of the different expansion
strategies discussed in Exhibit 2.5?
Answer:
Student answers may vary. Answers should include elements such as:
Penetration (Current Markets/Current Products):
2-1
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 02 – Corporate Strategy Decisions and Their Marketing Implications
Product development (Current Markets/New Products):
Market development (New Markets/Current Products):
Diversification (New Products/New Markets):
2. Which diversification strategy is illustrated by each of the following acquisitions?
What synergies or benefits might each purchase produce?
a. A packaged food company’s acquisition of a fast-food company that features
hamburgers and french fries.
b. A large retailer’s purchase of an interest in a company producing small appliances.
c. A tobacco company’s acquisition of a beer company.
d. An oil company’s acquisition of an insurance company.
Answer:
Student answers may vary. Answers should include elements such as:
a. A packaged food company’s acquisition of a fast-food company that features
hamburgers and French fries.
b. A large retailer’s purchase of an interest in a company producing small appliances.
2-2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 02 – Corporate Strategy Decisions and Their Marketing Implications
2-3
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 02 – Corporate Strategy Decisions and Their Marketing Implications
c. A tobacco company’s acquisition of a beer company.
d. An oil company’s acquisition of an insurance company.
3. Critics argue that the BCG portfolio model sometimes provides misleading advice
concerning how resources should be allocated across SBUs or product markets. What
are some of the possible limitations of the model? What might a manager do to reap the
benefits of portfolio analysis while avoiding at least some shortcomings you have
identified?
Answer:
Student answers may vary. Answers should include elements such as:
The BCG model has the following limitations:
Market growth rate is an inadequate descriptor of overall industry attractiveness.
While the matrix specifies appropriate investment strategies for each business:
End of Chapter Discussion Questions and Answers
4. The Kelly Bottling Company, located in a large metropolitan area of some 5 million
people, produced and marketed a line of carbonated beverages consisting mainly of
flavored soft drinks (not including colas), soda water, and tonics. They were sold in
different types of packages and sizes to a wide variety of retail accounts. How might
such a company expand its revenues by pursuing each of the different expansion
2-4
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 02 – Corporate Strategy Decisions and Their Marketing Implications
strategies discussed in Exhibit 2.5?
Answer:
Student answers may vary. Answers should include elements such as:
2-5
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 02 – Corporate Strategy Decisions and Their Marketing Implications
Product development (Current Markets/New Products):
Kelly will have to introduce new products. They can be product line extensions or
Market development (New Markets/Current Products):
Diversification (New Products/New Markets):
5. Which diversification strategy is illustrated by each of the following acquisitions?
What synergies or benefits might each purchase produce?
a. A packaged food company’s acquisition of a fast-food company that features
hamburgers and french fries.
b. A large retailer’s purchase of an interest in a company producing small appliances.
c. A tobacco company’s acquisition of a beer company.
d. An oil company’s acquisition of an insurance company.
Answer:
Student answers may vary. Answers should include elements such as:
A packaged food company’s acquisition of a fast-food company that features
hamburgers and French fries.
2-6
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 02 – Corporate Strategy Decisions and Their Marketing Implications
6. Critics argue that the BCG portfolio model sometimes provides misleading advice
concerning how resources should be allocated across SBUs or product markets. What
are some of the possible limitations of the model? What might a manager do to reap the
benefits of portfolio analysis while avoiding at least some shortcomings you have
identified?
Answer:
Student answers may vary. Answers should include elements such as:
The BCG model has the following limitations:
Market growth rate is an inadequate descriptor of overall industry attractiveness.
While the matrix specifies appropriate investment strategies for each business:
2-7
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.