What options are available to a firm that has a product in the decline stage of the product life cycle? Briefly discuss each option
What will be an ideal response?
A firm has many options with regard to a failing product. It may decide to maintain its brand, repositioning or reinvigorating it in hopes of moving it back into the growth stage of the product life cycle. Management may decide to harvest the product, which means reducing various costs (plant and equipment, maintenance, R&D, advertising, sales force), hoping that sales hold up. If successful, harvesting will increase the company's profits in the short run. Finally, management may decide to drop the product from its line. The company can sell the product to another firm or simply liquidate it at salvage value. If the company plans to find a buyer, it will not want to run down the product through harvesting.
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A) an asset's book value is lower than its fair value. B) an asset's book value is higher than its fair value C) the present value of the asset's future cash flows is lower than the asset's fair value. D) the present value of the asset's future cash flows is higher than the asset's fair value.
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A) factor matrix B) classification matrix C) correlation matrix D) total correlation matrix
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