Of the Weaknesses Inherent in the Use of the BCG

question 154

Multiple Choice

of the weaknesses inherent in the use of the BCG business portfolio analysis is that it

• A) causes dissension between different divisions when one is labeled a "star" and another a "dog."
• B) reduces employee motivation to move a low valued SBU to a higher one.
• C) considers too many SBU factors beyond market growth rate and relative market share.
• D) does not require sales forecasts in order to be implemented.
• E) is often difficult to obtain the needed information to place SBUs in the matrix correctly.

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Definitions:

Initial Investment

The initial amount of money spent to start a project, investment, or business, often including costs such as purchasing equipment, property, or technology.

Internal Rate of Return

The discount rate at which the net present value of all the cash flows from an investment or project equals zero, used as a gauge for its profitability.

Working Capital

The amount of current assets minus current liabilities, indicating the liquidity of a business.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period, used in capital budgeting to assess the profitability of an investment.