Requirement 1: identify and explain the significance of each of the following te

Question

Requirement 1:

identify and explain the significance of each of the following terms and concepts for company like Champs Footwear:

A) What is the relevance of quantitatively measuring the competitive strength of each business in a diversified company's business portfolio and determining which business units are strongest and weakest?

B) Briefly explain what is meant by each of the following terms to a business of your choosing:

a) relative market share

b) resource fit

c) a cash hog business

d) a cash cow business

Explanation / Answer

The relevance of quantitatively measuring the competitive strength of each business in a diversified company's business portfolio is:

B) a) Relative market share = It is a metric used to compare your relative position against the largest competitor in the market by dividing your market share by market share of the largest competitor. For example- Your market share is 25% and your competitor holds 50% , then RMS = 25/50 = 0.5

b) Resource fit = This means how well resources of the company match requirements of the business. For example - Your company plans to go digital and you have resources that have worked on digital technology, this is a good resource fit.

d) a Cash hog business and Cash Cow business

Increasing sales revenue

Cash Hog business Cash Cow Business Generates inadequate cash flows Generates good cash flows to sustain business The company needs to invest to sustain the business, deficient working capital Self-earnings sustains the business, adequate working capital Declining sales revenue

Increasing sales revenue

Cash-hungry Cash-rich

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