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You are in charge of corporate investments at Greeko, a company whose business portfolio is well-diversified. The company currently has four major productswhich constitute as
You are in charge of corporate investments at Greeko, a company whose business portfolio is well-diversified. The company currently has four major productswhich constitute as many SBUS Alpha (fitness watches), Beta (fishing equipment), Gamma (GPS trackers), Delta (smart clothing), and Epsilon (car rental): Alpha has a very large market share (4 times the market share of its main competitor), and it has a large sales volume. It produces about $5,000,000 in cash flow which represents as much money that can be used right now for anything. However, the growth of the fitness watch market has been slowing down recently and barely reached 2% last year. Beta, while also having a modest sales volume, is in a market that is shrinking (minus 5% compared to last year). Furthermore, Beta owns 5% of the fishing equipment market, which is seven times less than the leading competitor. Beta has negligible cash flow. Gamma has a modest current sales volume making its ability to produce cashflow negligible. Although the market is growing 15% a year, Gamma has only half the market shares of its leading competitor. Cash flow from Gamma is currently negligible. Delta has great potential considering that the market of smart clothing is growing (20% a year) and that Delta has twice the market share of its main competitor. However, production costs are currently too high to produce enough cash flow to sustain Delta's development. Epsilon leads the market of car rental in the region with 30% market shares. But the main competitor is a close second with 25% market shares. The latest statistics on the car rental industry show as well that more people have been renting cars in the region compared to last year with a progression of 2%. o While all SBUS could beneficiate from heavy investments, corporate management has said each one of them would require between four and five million. You think that using a growth-share matrix will help you make a sound decision as to which of the SBUs you should choose to invest in. You are in charge of corporate investments at Greeko, a company whose business portfolio is well-diversified. The company currently has four major productswhich constitute as many SBUS Alpha (fitness watches), Beta (fishing equipment), Gamma (GPS trackers), Delta (smart clothing), and Epsilon (car rental): Alpha has a very large market share (4 times the market share of its main competitor), and it has a large sales volume. It produces about $5,000,000 in cash flow which represents as much money that can be used right now for anything. However, the growth of the fitness watch market has been slowing down recently and barely reached 2% last year. Beta, while also having a modest sales volume, is in a market that is shrinking (minus 5% compared to last year). Furthermore, Beta owns 5% of the fishing equipment market, which is seven times less than the leading competitor. Beta has negligible cash flow. Gamma has a modest current sales volume making its ability to produce cashflow negligible. Although the market is growing 15% a year, Gamma has only half the market shares of its leading competitor. Cash flow from Gamma is currently negligible. Delta has great potential considering that the market of smart clothing is growing (20% a year) and that Delta has twice the market share of its main competitor. However, production costs are currently too high to produce enough cash flow to sustain Delta's development. Epsilon leads the market of car rental in the region with 30% market shares. But the main competitor is a close second with 25% market shares. The latest statistics on the car rental industry show as well that more people have been renting cars in the region compared to last year with a progression of 2%. While all SBUs could beneficiate from heavy investments, corporate management has said each one of them would require between four and five million. You think that using a growth-share matrix will help you make a sound decision as to which of the SBUs you should choose to invest in. Questions: 1. Use the grow-share matrix below to categorize each of the SBUs as a cash cow, a star, a question mark, or a dog, and systematically explain your answer in terms of market growth rate and relative market share. (6 marks) 2. Then, decide which one should receive the investment and explain your choice. (2 markss) You are in charge of corporate investments at Greeko, a company whose business portfolio is well-diversified. The company currently has four major productswhich constitute as many SBUS Alpha (fitness watches), Beta (fishing equipment), Gamma (GPS trackers), Delta (smart clothing), and Epsilon (car rental): Alpha has a very large market share (4 times the market share of its main competitor), and it has a large sales volume. It produces about $5,000,000 in cash flow which represents as much money that can be used right now for anything. However, the growth of the fitness watch market has been slowing down recently and barely reached 2% last year. Beta, while also having a modest sales volume, is in a market that is shrinking (minus 5% compared to last year). Furthermore, Beta owns 5% of the fishing equipment market, which is seven times less than the leading competitor. Beta has negligible cash flow. Gamma has a modest current sales volume making its ability to produce cashflow negligible. Although the market is growing 15% a year, Gamma has only half the market shares of its leading competitor. Cash flow from Gamma is currently negligible. Delta has great potential considering that the market of smart clothing is growing (20% a year) and that Delta has twice the market share of its main competitor. However, production costs are currently too high to produce enough cash flow to sustain Delta's development. Epsilon leads the market of car rental in the region with 30% market shares. But the main competitor is a close second with 25% market shares. The latest statistics on the car rental industry show as well that more people have been renting cars in the region compared to last year with a progression of 2%. o While all SBUS could beneficiate from heavy investments, corporate management has said each one of them would require between four and five million. You think that using a growth-share matrix will help you make a sound decision as to which of the SBUs you should choose to invest in. You are in charge of corporate investments at Greeko, a company whose business portfolio is well-diversified. The company currently has four major productswhich constitute as many SBUS Alpha (fitness watches), Beta (fishing equipment), Gamma (GPS trackers), Delta (smart clothing), and Epsilon (car rental): Alpha has a very large market share (4 times the market share of its main competitor), and it has a large sales volume. It produces about $5,000,000 in cash flow which represents as much money that can be used right now for anything. However, the growth of the fitness watch market has been slowing down recently and barely reached 2% last year. Beta, while also having a modest sales volume, is in a market that is shrinking (minus 5% compared to last year). Furthermore, Beta owns 5% of the fishing equipment market, which is seven times less than the leading competitor. Beta has negligible cash flow. Gamma has a modest current sales volume making its ability to produce cashflow negligible. Although the market is growing 15% a year, Gamma has only half the market shares of its leading competitor. Cash flow from Gamma is currently negligible. Delta has great potential considering that the market of smart clothing is growing (20% a year) and that Delta has twice the market share of its main competitor. However, production costs are currently too high to produce enough cash flow to sustain Delta's development. Epsilon leads the market of car rental in the region with 30% market shares. But the main competitor is a close second with 25% market shares. The latest statistics on the car rental industry show as well that more people have been renting cars in the region compared to last year with a progression of 2%. While all SBUs could beneficiate from heavy investments, corporate management has said each one of them would require between four and five million. You think that using a growth-share matrix will help you make a sound decision as to which of the SBUs you should choose to invest in. Questions: 1. Use the grow-share matrix below to categorize each of the SBUs as a cash cow, a star, a question mark, or a dog, and systematically explain your answer in terms of market growth rate and relative market share. (6 marks) 2. Then, decide which one should receive the investment and explain your choice. (2 markss)
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