You have accepted a job as the president and CEO of a large transportation conglomerate. Over the years, the conglomerate has ac

Question

3 years ago

14

You have accepted a job as the president and CEO of a large transportation conglomerate. Over the years, the conglomerate has ac

quired a number of unrelated divisions. Your first action as CEO is to complete a strategic plan.
Business Projected Growth Rate Current market share
Shipping Low 1%
Cargo inspection High 5%
Railroad loading Low 75%
Freight forwarding High 70%

Which of the following divisions would you take profits from and continue to run?
a. Railroad loading
b. Shipping
c. Freight forwarding
d. Cargo inspection

Business

1 answer:

rjkz [21] · Answer 1 · 2022-05-10T23:41:38+03:00

Answer: a. Railroad loading

Explanation:

This question relates to the BCG matrix which allows a company with multiple divisions to know how to deal with its various divisions based on their growth rate and market share.

The question specifically relates to a matrix called "Cash cows". Cash cows are divisions that have a significant market share but a low growth rate. These divisions are stable and bring more money into the company than they cost to run.

This allows us to take profits from them and invest in other. The Railroad loading controls a significant market share of 75% but has a low growth rate so is a Cash cow.