While Hybrid Vehicles Are Very Fuel-Efficient, They Are Also Expensive

question 176

Multiple Choice

While hybrid vehicles are very fuel-efficient, they are also expensive to purchase. Still, hybrid vehicles sales have a compound annual growth rate of 88.6 percent in recent years. Several years ago, the Honda Motor Co. unveiled the hybrid version of the Honda Civic. Sales of the Civic eventually surpassed those of the Toyota Prius, making it the top-selling hybrid car in the United States. For years, Honda has experienced tremendous success with its Accords; these Honda cars are the top-selling automobiles in the United States. Where would the Honda Civic (hybrid version) and the Honda Accord fall in the BCG business portfolio analysis matrix?

• A) The hybrid Civic is a star; the Accord is a cash cow.
• B) The hybrid Civic is a cash cow; the Accord is a star.
• C) Due to the overwhelming success of Honda cars, both the Accord and the hybrid Civic are cash cows.
• D) The hybrid Civic is a dog; the Accord is a cash cow.
• E) The hybrid Civic is a dog; the Accord is a star.

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Definitions:

Market Value

The now rate for transactions involving the purchase or sale of assets or services.

Debt

Money borrowed by one party from another, under the condition it will be paid back often with interest, used by individuals, businesses, and governments to finance activities.

Common Stock

Equity ownership in a corporation, with voting rights and potential dividends not guaranteed.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid out before dividends to common shareholders and typically lacks voting rights.