Answer the following statements true (T) or false (F)
1. Burberry makes outerwear, accessories like umbrellas, and children's clothing, which is called a related diversification strategy.
2. Synergy is one of the benefits of a single-product strategy.
3. The BCG matrix is a means of evaluating strategic business units on the basis of both their business growth rates and their profitability.
4. Cash cows in the BCG matrix have slow growth but high market share.
1. TRUE
An example of a related diversification strategy is the famous British raincoat maker Burberry. It started by making and marketing outerwear clothing but since then has expanded into related business lines, including accessories such as umbrellas, children's clothing, and even fragrances, which it sells in its own stores.
2. FALSE
Synergy is characteristic of a related diversification strategy. The concept of synergy is that the economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately.
3. FALSE
The BCG matrix is a means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market.
4. TRUE
Cash cows in the BCG matrix have slow growth but high market share, and income from them finances stars and question marks.
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