BUSINESS ADMINISTRATION
STRATEGIC MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Replace shortlyWithdraw from the market altogetherRe-positioning
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Maintain the market positionSo the business needs to invest in the product to cope with a growing market and growing sales-therefore promotion costs will be high to differentiate (through branding) the product and reinforce its brand imageCash flow may be nearly zero because although profits will be high, bringing money in, spending will also be high leading to outflows
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Quick decision is needed if sales do not improve; revised design, re-launch or withdrawal from the marketInvestment is needed to cope with expanding sales in a fast growing market
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The cash from this product can be used to milk and inject into some of other products in the portfolioMaintain the cash cow for as long as possibleAs the product has a strong presence in the market, businesses can even charge slightly higher prices to increase their profit margin
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Detailed explanation-1: -Reduce your investment and take out the maximum cash flow from a product, which increases its overall profitability. This strategy is best used for Cash Cows. Divest the amount of money invested in a product and apply it elsewhere.
Detailed explanation-2: -Which strategy is used in the cash cow position? A company that holds a moneymaker position needs to adopt strategies including careful budgeting, marketing, prioritizing, and innovation. This way, the company can keep generating cash flows out of it.
Detailed explanation-3: -Cash Cow Example A cash cow is a company or business unit in a mature slow-growth industry. Cash cows have a large share of the market and require little investment. For example, the iPhone is Apple’s (AAPL) cash cow.
Detailed explanation-4: -A cash cow is one of the four BCG matrix categories that represents a product or business with high market share and low market growth. Every product has a life cycle, and reevaluating it at each phase is considered important to managing its commercial success.