Strategic management emphasizes the monitoring and evaluation of external opportunities and threats in the light of an organization’s ................... and designing strategies for the survival and growth of the organization.
(A)Plans and budget
(B)Asset and liabilities
(C)Opportunities and plans
(D)Strengths and weaknesses
Answer: (D) Strengths and weaknesses
Source: ICSI Guideline Answers (answer key), December 2024, Q. 66 (Financial and Strategic Management paper, Syllabus 2017).
Purpose of a strategic analysis is to :
(A)Assess current strategies
(B)Analyze an organization’s external and internal environment
(C)Generate and evaluate the most successful strategic alternatives
(D)All of the above
Answer: (D) All of the above
Source: ICSI Guideline Answers (answer key), December 2024, Q. 79 (Financial and Strategic Management paper, Syllabus 2017).
AThe process we use to gain understanding and insight into our present situation is
(A)Situational analysis
(B)Sensitive analysis
(C)Simulation analysis
(D)All of the above
Answer: (A) Situational analysis
Source: ICSI Guideline Answers (answer key), December 2024, Q. 80 (Financial and Strategic Management paper, Syllabus 2017).
The Ansof ’s Growth matrix suggests a ........... four way model for business growth.
(A)Six
(B)Five
(C)Four
(D)Two
Answer: (C) Four
Source: ICSI Guideline Answers (answer key), December 2024, Q. 83 (Financial and Strategic Management paper, Syllabus 2017).
( i )“TOWS strategies are a product of the trade-off between internal and external factors.” Do you agree with this statement ? How can this approach help a strategist in decision-making?
Yes, SWOT Analysis starts with an internal analysis, the TOWS Matrix takes the other route, with an external environment analysis; the threats and opportunities are examined first. Then, in TOWS makes a trade-off between internal and external factors. As we know, Strengths and weaknesses are internal factors and opportunities and throats are external factors. This trade-off is the point where four potential strategies derive their importance, these are Strength/Opportunity (SO) Weakness/ Opportunity (WO), Strength/Threat (ST) and Weakness/Threat (WT) as shown in matrix given below.
TOWS ANALYSIS
| Internal Factors | |||
| External Factors | Strengths (S) | Weaknesses (W) | |
| Opportunities (O) | Strengths/Opportunities(SO) | Weaknesses/ Opportunities (WO) | |
| Threats (T) | Strength/ Threats(ST) | Weaknesses/Threats (WT) |
a)Strength/Opportunity (SO): Strengths of the companies are utilized to exploit the opportunities.
b)Weakness/Opportunity (WO): The organization finds options that overcome weaknesses, and then take advantage of opportunities. Therefore, it mitigates weaknesses, to exploit opportunities,
c)Strength/Threat (ST): Exploiting strengths to overcome any potential threats.
d)Weakness/Threat (WT): With Weakness/Threat (WT) strategies, one is attempting to minimize any weakness to avoid possible threat.
A strategist may understand the strength, weakness, opportunities and threats of the Organisation and analyse the following strategies of TOWS which are helpful in decision making:
•Aggressive strategy (maxi-maxi)
•Conservative strategy (maxi-mini)
•Competitive strategy (mini-maxi)
•Defensive strategy (mini-mini)
| External Opportunities (O) | External Threats (T) | |
| Internal Strengths (S) | SO | ST |
| “Maxi-Maxi Strategy Strategies | Maxi-Mini Strategy | |
| that use strengths to maximise | ||
| Strategies that use strengths to | ||
| opportunities | ||
| minimise threats. | ||
| Internal Weaknesses (W) | WO | WT |
| ‘Mini-Maxi’ Strategy | Mini-Mini Strategy | |
| Strategies that minimise | Strategies that minimise | |
| weaknesses by taking | weaknesses and avoid threats. | |
| advantage of opportunities |
Source: ICSI Guideline Answers, December 2024, Q. 2A(i) (Syllabus 2022).
.................. strategy is to maintain their market position by preserving existing customer base.
(A)Market Challenger
(B)Market Nicher
(C)Market Leader
(D)Market Follower
Answer: (D) Market Follower
Source: ICSI Guideline Answers (answer key), June 2024, Q. 79 (Financial and Strategic Management paper, Syllabus 2017).
................ refers to the process of conducting research on a company and its operating environment to formulate a strategy.
(A)Candlestick analysis
(B)Strategic analysis
(C)Sensitivity analysis
(D)Simulation analysis
Answer: (B) Strategic analysis
Source: ICSI Guideline Answers (answer key), June 2024, Q. 83 (Financial and Strategic Management paper, Syllabus 2017).
How often should a SWOT Analysis be performed ?
(A)Only when specific issues need to be addressed
(B)Only when the business starts
(C)At least once per year
(D)Every 3-5 year
Answer: (C) At least once per year
Source: ICSI Guideline Answers (answer key), June 2024, Q. 84 (Financial and Strategic Management paper, Syllabus 2017).
................. is a process through which a strategy is put into action.
(A)Strategic analysis
(B)Strategy implementation
(C)SWOT analysis
(D)Strategic turnaround
Answer: (B) Strategy implementation
Source: ICSI Guideline Answers (answer key), June 2024, Q. 89 (Financial and Strategic Management paper, Syllabus 2017).
(d)What is the purpose of SWOT Analysis ? Why is it necessary to do a SWOT analysis before selecting a particular strategy for a business organization ?
SWOT stands for strengths, weaknesses, opportunities, and threats, is a tool for strategic analysis of any organization, which takes into account examination of the company’s internal as well as its external environment. It consists in recognition of key assets and weaknesses of the company and marching them to exploit future opportunities and combating threats. SWOT is quite helpful in formulating a company’s strategy.
Strength: Strength is an inherent capability of the organisation which it can use to gain strategic advantage over its competitors.
Weakness: A weakness is an inherent limitation or constraint of the organisation which creates strategic disadvantage to it.
Opportunity: An opportunity is a favourable condition in the organisation’s environment which enables it to strengthen its position.
Threat: A threat is an unfavourable condition in the organisation’s environment which causes a risk for, or damage to, the organisation’s position.
SWOT analysis helps managers to craft a business model (or models) that will allow a company to gain a competitive advantage in its industry (or industries). Competitive advantage leads to increased profitability, and this maximises a company’s chances of surviving in the fast changing, competitive environment. Key reasons for SWOT analyses are:
•It provides a logical framework
•It presents a comparative account
•It guides the strategist in strategy identification.
Source: ICSI Guideline Answers, June 2024, Q. 2A(d) (Syllabus 2022).
Which of the following is not a core focus area of complete situation analysis ?
(A)The Problem
(B)The Product
(C)The People
(D)The Broad Context
Answer: (B) The Product
Source: ICSI Guideline Answers (answer key), December 2023, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is the ‘Mini-Maxi’ strategy in TOWS analysis ?
(A)Conservative strategy
(B)Competitive strategy
(C)Aggressive strategy
(D)Defensive strategy
Answer: (B) Competitive strategy
Source: ICSI Guideline Answers (answer key), December 2023, Q. 86 (Financial and Strategic Management paper, Syllabus 2017).
Which one of the following questions may not be relevant in assessing the effectiveness of Situation analysis ?
(A)Is it simple and practical to use ?
(B)Is it easy and clear for even an outsider to understand ?
(C)Does it clearly identify present goals for the business ?
(D)Is it focused on key factors that are impacting my business both internally and externally ?
Answer: (C) Does it clearly identify present goals for the business ?
Source: ICSI Guideline Answers (answer key), June 2023, Q. 77 (Financial and Strategic Management paper, Syllabus 2017).
Match the followings in the light of Amazon’s SWOT analysis :
| A1 | Strength | B1 | Seasonality | ||
| A2 | Weakness | B2 | Brand Identity | ||
| A3 | Opportunity | B3 | Patent Infringement | ||
| A4 | Threats | B4 | Expansion of local business |
(A)A1-B2; A2-B1; A3-B4; A4-B3
(B)A1-B2; A2-B3; A3-B1; A4-B4
(C)A1-B4; A2-B1; A3-B2; A4-B3
(D)A1-B4; A2-B3; A3-B2; A4-B1
Answer: (A) A1-B2; A2-B1; A3-B4; A4-B3
Source: ICSI Guideline Answers (answer key), June 2023, Q. 78 (Financial and Strategic Management paper, Syllabus 2017).
Identify the FALSE statement :
(A)Weihrich developed TOWS Matrix in 1982, as the next step of SWOT Analysis in developing alternative strategies
(B)TOWS Matrix is an effective way of combining (a) internal strengths with external opportunities and threats, and (b) internal weaknesses with external opportunities and threats to develop a strategy
(C)The SWOT/TOWS Matrix is not just meant for the top levels of management in an organization, rather can be very useful tool for divisions, products, functions as well as departments
(D)These cannot be used for individual employees on an operational level
Answer: (D) These cannot be used for individual employees on an operational level
Source: ICSI Guideline Answers (answer key), June 2023, Q. 80 (Financial and Strategic Management paper, Syllabus 2017).
Match the followings as per the TOWS matrix of Pepsi :
| A1 | ‘WT’ Analysis | B1 Pepsi had more expensive products than Coke | |
| A2 | ‘WO’ Analysis B2 Very strong taste, it really feels that something highly toxic | ||
| A3 | ‘ST’ Analysis | B3 Use celebrities in their advertising campaigning | |
| A4 | ‘SO’ Analysis | B4 They lack behind in catering the rural areas |
(A)A1-B3; A2-B1; A3-B4; A4-B2
(B)A1-B3; A2-B1; A3-B2; A4-B4
(C)A1-B2; A2-B4; A3-B3; A4-B1
(D)A1-B2; A2-B4; A3-B1; A4-B3
Answer: (D) A1-B2; A2-B4; A3-B1; A4-B3
Source: ICSI Guideline Answers (answer key), June 2023, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
Situation Analysis is conducted :
(A)At the beginning of any program/project after developing a strategy
(B)At the beginning of any program/project before developing a strategy
(C)At the end of the program after implementing a strategy
(D)None of the above
Answer: (B) At the beginning of any program/project before developing a strategy
Source: ICSI Guideline Answers (answer key), December 2022, Q. 86 (Financial and Strategic Management paper, Syllabus 2017).
The origin of SWOT analysis is supposed to be rooted in the concept of :
(A)Force Field Analysis of K Levin
(B)Interactive Course in Management of Harvard Business School
(C)Gordon and Howell Report
(D)Five Force Model of Michel Porter
Answer: (A) Force Field Analysis of K Levin
Source: ICSI Guideline Answers (answer key), December 2022, Q. 87 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is false in respect of various strategies of TOWS analysis?
(A)Strengths of the firm are used to maximise opportunities
(B)Strengths of the firm are used to minimise threats
(C)Weaknesses of the firm are overcome by using strengths
(D)Weaknesses of the firm are overcome by using opportunities
Answer: (C) Weaknesses of the firm are overcome by using strengths
Source: ICSI Guideline Answers (answer key), December 2022, Q. 88 (Financial and Strategic Management paper, Syllabus 2017).
Situation Analysis is an essential component of strategy formulation. Timing of conducting Situation Analysis is very important. It should be conducted during which of the following time horizons ?
(A)Before development of a strategy
(B)During development of a strategy
(C)After development of a strategy
(D)All of the above
Answer: (A) Before development of a strategy
Source: ICSI Guideline Answers (answer key), June 2022, Q. 72 (Financial and Strategic Management paper, Syllabus 2017).
Effectiveness of Situation Analysis can be assessed by which of the following approaches ?
(A)Through its simplicity and practicality
(B)Through its clarity for even an outsider to understand
(C)Through its focus being on key factors that have an impact on business, both internally and externally, and through its identification of future goals of the business
(D)All of the above
Answer: (D) All of the above
Source: ICSI Guideline Answers (answer key), June 2022, Q. 73 (Financial and Strategic Management paper, Syllabus 2017).
In terms of SWOT analysis of Amazon, which of the following may be considered as threats ?
(A)Loss of Profits due to low profit margins
(B)Patent Infringement and other aspects of litigation
(C)Cyber-security issues
(D)All of the above
Answer: (D) All of the above
Source: ICSI Guideline Answers (answer key), June 2022, Q. 74 (Financial and Strategic Management paper, Syllabus 2017).
Strategies that utilizes strengths to maximize the opportunities are represented by which cell of TOWS matrix ?
(A)WT Cell
(B)ST Cell
(C)SO Cell
(D)WO Cell
Answer: (C) SO Cell
Source: ICSI Guideline Answers (answer key), June 2022, Q. 75 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is a strategy of TOWS concept ?
(A)Competitive Strategy
(B)Conducive Strategy
(C)Concrete Strategy
(D)Conflict Strategy
Answer: (A) Competitive Strategy
Source: ICSI Guideline Answers (answer key), June 2022, Q. 76 (Financial and Strategic Management paper, Syllabus 2017).
The .................. Matrix also helps in brainstorming to bring out great ideas to generating effective strategies and tactics.
(A)SWOT
(B)Defensive
(C)Aggressive
(D)TOWS
Answer: (D) TOWS
Source: ICSI Guideline Answers (answer key), December 2021, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
Strategies that minimize weakness and avoid threats are represented by which cell of the TOWS Matrix?
(A)The WT cell
(B)The WO cell
(C)The SO cell
(D)The ST cell
Answer: (A) The WT cell
Source: ICSI Guideline Answers (answer key), June 2021, Q. 78 (Financial and Strategic Management paper, Syllabus 2017).
The SWOT/TOWS analysis is a very simple yet valuable technique which aids in identifying opportunities and threats from an ............. enviroment, and analysing its .................... stengths and weakness.
(A)external; own
(B)own; own
(C)external; external
(D)own; external
Answer: (A) external; own
Source: ICSI Guideline Answers (answer key), June 2021, Q. 81 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is the Strategy of TOWS ?
(A)Competitive Strategy
(B)Corporate Strategy
(C)Business Strategy
(D)Functional Strategy
Answer: (A) Competitive Strategy
Source: ICSI Guideline Answers (answer key), December 2020, Q. 81 (Financial and Strategic Management paper, Syllabus 2017).
The two internal elements of SWOT analysis are :
(A)Weaknesses and threats
(B)Opportunities and threats
(C)Strengths and weaknesses
(D)Strengths and threats
Answer: (C) Strengths and weaknesses
Source: ICSI Guideline Answers (answer key), December 2020, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
In SWOT analysis, situations in which firms could convert weaknesses into strengths and threats into opportunities, known as :
(A)Conversion strategies
(B)Strategic leverage
(C)Strategic policy
(D)Vulnerability
Answer: (A) Conversion strategies
Source: ICSI Guideline Answers (answer key), December 2020, Q. 83 (Financial and Strategic Management paper, Syllabus 2017).
Restructuring and downsizing becomes necessary due to the following factors except :
(A)Unforeseen changes in business environment
(B)New technological development
(C)Increase in demand
(D)Excess production capacity
Answer: (C) Increase in demand
Source: ICSI Guideline Answers (answer key), December 2020, Q. 91 (Financial and Strategic Management paper, Syllabus 2017).
Which section of the SWOT Matrix involves matching internal strengths with external opportunities ?
(A)The WT cell
(B)The SW cell
(C)The SO cell
(D)The ST cell
Answer: (C) The SO cell
Source: ICSI Guideline Answers (answer key), December 2019, Q. 88 (Financial and Strategic Management paper, Syllabus 2017).
The most probable time to pursue a harvest strategy is in a situation of ...............
(A)High growth
(B)Decline in the market life-cycle
(C)Strong competitive advantage
(D)Mergers and acquisitions
Answer: (B) Decline in the market life-cycle
Source: ICSI Guideline Answers (answer key), December 2019, Q. 91 (Financial and Strategic Management paper, Syllabus 2017).
When two organizations combine to increase their strengths and financial gains, it is called :
(A)Hostile takeover
(B)Liquidation
(C)Merger
(D)Acquisition
Answer: (C) Merger
Source: ICSI Guideline Answers (answer key), December 2019, Q. 94 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following can be said to bethe strategy followed in TOWS approach?
(A)Defensive Strategy
(B)Offensive Strategy
(C)Attack Strategy
(D)Functional Strategy
Answer: (A) Defensive Strategy
Source: ICSI Guideline Answers (answer key), December 2019, Q. 99 (Financial and Strategic Management paper, Syllabus 2017).
Case Study :
About the company
Black Diamond Ltd. (BDL) is a public limited company in Country-B engaged in mining and production of coal and coal products. The mission of the company is “to be a partner in the economy by producing and fulfilling the energy demand of the country by providing quality coal in economical and sustainable manner”. The company is listed on a stock exchange of the Country B. Shares of the company are held by the Govt. of Country-B, Mutual funds & FII and general public in proportion of 75%, 12% and 13% respectively. During the financial year 2018-19, the company has produced and dispatched 500 million tonnes of coal. Of this 76% to power plants, 2% to steel plant and rest to other sectors.
Coal is the prime source of energy and fulfills approx. 70% of energy demand of the country B. The thermal power plants, steel manufacturing plants, cement and fertilizer plants are the major consumers of coal.
The country-B has a large reserve of coal but the quality and cost are major concern. In the last few years there has been increase in import of coal by steel and power plants. The steel plants import coal due to quality and cost advantage over domestic coal. As per a study report conducted by the BDL, good quality of coal can be produced only through deep and underground mining. Underground mining requires highly automated technology.
Challenges before BDL
For adopting deep underground mining the BDL is required to acquire land for new mines and latest automated machines for mining. Land acquisition in country-B has been a hard task due to land acquisition related laws and protests by the local community and NGOs as BDL has acres of idle land in the form of used abandoned mines which cannot be used for agricultural activities or human rehabilitation due to the risk of landslides. BDL is a labour intensive company with low productivity. Employee cost is the major cost of BDL which accounts for 55% of total cost. BDL is second largest employer in country B.
Till recent past, the BDL was the only company which was allowed for mining and marketing of the coal in the country but with the changing economic scenario and to meet the growing energy demand the Govt. of Country-B is mulling to allot coal blocks to steel plant and thermal power plant for captive consumption.
The Govt. of the Country B is committed to boost manufacturing and industrial infrastructure of the country in next 10 years. Power and steel sector would be witnessing a multifold increase in demand not only from Govt. schemes but also from private and domestic consumers.
To meet the energy demand, the Govt. has reduced the duty on imported coal. The Govt. being a signatory of Paris agreement on climate change, is committed for sustainable development by reducing carbon emission caused by usage of fossil fuels. It has entered into various technological MoUs to install clean energy sources like nuclear, solar and wind in near future.
Required :
(iv)Prepare a SWOT analysis for BDL.
SWOT Analysis for BDL
| Strengths | Weaknesses | Opportunities | Threats | |
| • Monopoly in | • Labour intensive | • Country has large | • Increasing demand of | |
| domestic market | company | reserve of coal | quality control by steel | |
| • Strong coal | • Bad Quality of coal | • Extracting good | and power plants which | |
| demand | for power plant which | quality coal through | is presently not available | |
| • Government | is 76% of customer | deep mining | with BDL. | |
| backed organi- | base | • Abandoned land for • Government plan to allot | ||
| sation with 75% | • High cost of | diversification i.e | coal blocks to steel and | |
| shares | production | solar and wind | thermal power plant may | |
| • Rich experience | • Lack of highly | energy | reduce consumption of | |
| in mining | automated | • Planning of govern- | coal provided by BDL. | |
| • Being listed entity, | technology | ment to boost | • The government | |
| it can raise more | manufacturing and | commitment to promote | ||
| funds from market | industrial infra- | non-conventional energy | ||
| for technology | structure | will hamper the coal | ||
| upgradation | demand in future. |
•Employee cost with low productivity can be a big threat due to lack of competitive advantage.
Source: ICSI Guideline Answers, June 2019, Q. 5(iv) (Financial and Strategic Management paper, Syllabus 2017).
Comment on the following :
(d)TOWS strategies are product of trade off between internal and external factors.
TOWS analysis scans opportunities and threats existing in external environment of any organization, and then generates, compares and selects strategies based on internal strengths and weakness to utilize such opportunities and reduce threats. SWOT Analysis starts with an internal analysis whereas the TOWS analyis starts with an external environment analysis. Strengths and weaknesses are internal factors and opportunities and threats are external factors. This trade-off is the point where four potential strategies derive their importance, these are Strength/Opportunity (SO), Weakness/Opportunity (WO), Strength/Threat (ST) and Weakness/Threat (WT). This is shown in matrix given below:
Thus, there are 4 types of strategies in TOWS:
1.Aggressive strategy (SO-maxi-maxi strategy) - Strategies that use strength to maximise opportunities.
2.Conservative strategy (ST-maxi-mini strategy) - Strategies that use strengths to minimize threats.
3.Competitive strategy (WO-mini-maxi strategy) - Strategies that minimize weaknesses by taking advantage of opportunities
4.Defensive strategy (WT-mini-mini strategy) - Strategies that minimize weaknesses and avoid threats.
Source: ICSI Guideline Answers, December 2018, Q. 6(d) (Financial and Strategic Management paper, Syllabus 2017).
(iii)In terms of market position, firms may be classified as Market Leader, Market Challenger, Market Follower and Market Nicher. Briefly explain these terms.
Market Leader : The market leader is the one who controls significant market share. the goal of a market leader is to reinforce their prominent position through the use of branding to develop and maintain their corporate image and to restrict the competitor’s brand. Market leaders may adopt unconventional or unexpected approaches to building growth and their tactical responses are likely to include: product proliferation; diversification; multi-branding; erecting barriers to entry; vertical and horizontal integration and corporate acquisitions.
Market Challenger: The market challenger holds the next highest market share in the industry, following closely the most dominant player. Their market posture is generally offensive because they have less to lose and more to gain by taking risks. They will compete ‘neck to neck’ with the market leader in an effort to grab their market share. their overall strategy is to gain market share through product, packaging and service innovations and new market.
Market Follower: Followers are generally content by taking a backseat and follow the policy of wait and watch. they rarely invest in their own funds in R&D and sit and relax to watch market leaders to bring out novel and innovative products and afterwards adopt a “me-too” approach. Their strategy is to maintain their market position by preserving existing customer base. Their strategy is to maintain steady profits by controlling costs.
Market Nicher: The market nicher occupies a small niche in the market in order to avoid ‘neck to neck’ competition. Their objective is to build strong ties with the existing customer base and develop strong loyalty with them. Their strategy is to develop and build the smaller segment and protect it. Tactically, nichers are likely to improve the product or service offering, leverage crossselling opportunities, offer value for money and build relationships through superior after sales service, service quality and other related value adding activities.
Source: ICSI Guideline Answers, December 2025, Q. 2A(iii) (Syllabus 2022).
AB Ltd. currently sells its products in US and China. While it is a market leader in US, AB Ltd has struggled to maintain its market share in China. It has decided to pull out of China entirely and focus on its US markets. Which is the following level of strategy does AB’s decision relate to ?
(A)Operational
(B)Functional
(C)Corporate
(D)Business
Answer: (C) Corporate
Source: ICSI Guideline Answers (answer key), December 2023, Q. 79 (Financial and Strategic Management paper, Syllabus 2017).
Match the following as per the TOWS strategies :
| A1 | Aggressive | strategy B1 | mini-mini | |
| A2 | Conservative | strategy B2 | mini-maxi | |
| A3 | Competitive strategy | B3 | maxi-mini | |
| B4 maxi-maxi | ||||
| A4 | Defensive strategy |
(A)A1-B3; A2-B2; A3-B1; A4-B4
(B)A1-B2; A2-B3; A3-B4; A4-B1
(C)A1-B4; A2-B3; A3-B2; A4-B1
(D)A1-B4; A2-B2; A3-B1; A4-B3
Answer: (C) A1-B4; A2-B3; A3-B2; A4-B1
Source: ICSI Guideline Answers (answer key), June 2023, Q. 81 (Financial and Strategic Management paper, Syllabus 2017).
The fundamental concept of strategic business unit is to identify the independent ................. served by an organization.
(A)Cost/Market segments
(B)Profit/Market segments
(C)Profit/Cost segments
(D)Product/Market segments
Answer: (D) Product/Market segments
Source: ICSI Guideline Answers (answer key), June 2023, Q. 89 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is false in respect of a firm that is Market Nicher ?
(A)The firm holds a considerable market share in the industry
(B)The objective of the firm is a build strong ties with the existing customer base and develop strong loyalty with them
(C)Tactical responses of such firm include improving product/service offering, leverage cross-selling opportunities, offer value for money, etc
(D)All of the above are true
Answer: (A) The firm holds a considerable market share in the industry
Source: ICSI Guideline Answers (answer key), December 2022, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
Match the following (1) Maxi-Maxi (i) Defensive (2) Maxi-Mini (ii) Competitive
(3)Mini-Maxi (iii) Conservative (4) Mini- Mini (iv) Aggressive
(A)(1)-(iv), (2)-(iii), (3)-(ii), (4)-(i)
(B)(1)-(iii), (2)-(ii), (3)-(iv), (4)-(i)
(C)(1)-(i), (2)-(iii), (3)-(ii), (4)-(iv)
(D)(1)-(iv), (2)-(i), (3)-(ii), (4)-(iii)
Answer: (A) (1)-(iv), (2)-(iii), (3)-(ii), (4)-(i)
Source: ICSI Guideline Answers (answer key), December 2021, Q. 78 (Financial and Strategic Management paper, Syllabus 2017).
Indian Dairy Products market total size is ₹ 28,000 crore and XY Co. Ltd., dominating market share of ₹ 4,800 crore and AN Co. Ltd., having turnover of ₹ 428.50 crore. Find relative market share of AN Co. Ltd.
(A)8.93%
(B)17.14%
(C)1.53%
(D)15.16%
Answer: (A) 8.93%
Source: ICSI Guideline Answers (answer key), December 2021, Q. 79 (Financial and Strategic Management paper, Syllabus 2017).
What is the key benefit of identifying the organisation’s SBUs ?
(A)It helps the development of business level stategies
(B)It makes financial control easier
(C)It prevents a focus solely on market-based criteria
(D)It decreases the complexity of the organisation’s structures
Answer: (A) It helps the development of business level stategies
Source: ICSI Guideline Answers (answer key), June 2021, Q. 73 (Financial and Strategic Management paper, Syllabus 2017).
Large organizations create .............., which assume the role of a separate company and create their own strategies and plans in order to achieve their corporate goals and contribution to the overall organization.
(A)marketing objectives
(B)strategic business units
(C)marketing activities
(D)business development units
Answer: (B) strategic business units
Source: ICSI Guideline Answers (answer key), December 2020, Q. 75 (Financial and Strategic Management paper, Syllabus 2017).
Statement (I) : Stars operate in low growth industries and maintain high market share.
Statement (II) : “Dogs” have weak market share in high-growth market.
Codes :
(A)Statement (I) is correct but (II) is incorrect
(B)Statement (II) is correct but (I) is incorrect
(C)Both the statements (I) and (II) are correct
(D)Both the statements (I) and (II) are incorrect
Answer: (D) Both the statements (I) and (II) are incorrect
Source: ICSI Guideline Answers (answer key), December 2020, Q. 80 (Financial and Strategic Management paper, Syllabus 2017).
A Strategic Business Unit (SBU) is defined as a division of an organisation :
(A)that help in the marketing operations.
(B)that enable managers to have better control over the resources.
(C)that help in the choice of technology.
(D)that help in the allocation of scarce resources.
Answer: (B) that enable managers to have better control over the resources.
Source: ICSI Guideline Answers (answer key), December 2019, Q. 62 (Financial and Strategic Management paper, Syllabus 2017).
Typically profits are highest in which stage of industry life-cycle ?
(A)Introduction
(B)Growth
(C)Maturity
(D)Decline
Answer: (B) Growth
Source: ICSI Guideline Answers (answer key), December 2019, Q. 80 (Financial and Strategic Management paper, Syllabus 2017).
Outsourcing is the :
(A)pinning off of a value-creating activity to create a new firm
(B)Selling of a value-creating activity to other firms
(C)Purchase of a value-creating activity from an external supplier
(D)Use of computers to obtain valuecreating data from the Internet
Answer: (C) Purchase of a value-creating activity from an external supplier
Source: ICSI Guideline Answers (answer key), December 2019, Q. 85 (Financial and Strategic Management paper, Syllabus 2017).
The emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low in the ................... stage of the industry lifecycle.
(A)Maturity
(B)Introduction
(C)Growth
(D)Decline
Answer: (B) Introduction
Source: ICSI Guideline Answers (answer key), December 2019, Q. 90 (Financial and Strategic Management paper, Syllabus 2017).
Financial objectives involve all of the following, except :
(A)growth in revenues.
(B)larger market share.
(C)higher dividends.
(D)greater return on investment.
Answer: (B) larger market share.
Source: ICSI Guideline Answers (answer key), December 2019, Q. 95 (Financial and Strategic Management paper, Syllabus 2017).
(e)Two firms A and B are belonging to the service sector. They are identical except growth rate and market share because of locational and other external reasons. Firm A has high market share and high growth rate while firm B has a high market share with a low business growth rate. You need to identify the category of firm A and B to which they belong referring to the BCG matrix and advise them right strategy so as to remain competitive in the market.
As per the information the firm A belongs to the category of Star. In such category of product, both market share as well as growth rate is high. Stars cannot be complacent when they are on top because they can immediately be overtaken by another company which capitalizes on the market growth rate.
Strategies for Stars
All types of marketing, sales promotion and advertising strategies are used for Stars. Similarly in Stars, because of the high competition and rising market share, the concentration and investment needs to be high in marketing activities so as to increase and retain the market share.
Firm B falls in the category of cash cows. Cash cows are products which have a high market share in low growing market.
Strategies for cash cow
Cash cows are the most stable product/service line for any business and hence the strategy includes retention of the market share for such category. As the market growth rate is low and acquisition is less and customer retention is higher. Thus, customer satisfaction programs, loyalty programs and other such promotional methods form the core of the marketing plan for a cash cow product. The company can also adopt market expansion strategies by identifying opportunities in the emerging global markets.
Source: ICSI Guideline Answers, December 2018, Q. 5(e) (Financial and Strategic Management paper, Syllabus 2017).
Case Study :
(a)Neel Ltd., is a business organized as three divisions and head office. The divisions are based on market groupings, which are Retail, Wholesale and Government. The divisions do not trade with each other.
The main method of control of the divisions has been the requirement to earn a Return On Investment (ROI) of 18% p.a. The definition of return and capital employed is provided by head office and the criterion ROI rate of 18%.
The recent experience of Neel Ltd., is that the group as a whole has been able to earn the 18% but there have been wide variations between the results obtained by different division. This infringes another group policy that forbids cross-subsidization, i.e., each and every division must earn the criterion ROI.
Neel Ltd. is now considering divestment strategies and this could include the closure of one or more of its divisions.
The head office is aware that the Boston Product Market Portfolio Matrix (BPMPM) is widely used within the divisions in the formulation and review of marketing strategies. As it is so widely known within the group and is generally regarded by the divisions as being useful, the head office is considering employing this approach to assist in the divestment decision.
You are required to :
(i)Evaluate the use of the concept of ROI by Neel Ltd. and its policy that forbids crosssubsidization.
(ii)Describe the extent to which BPMPM could bc applied by Neel Ltd. in its divestment decision. Evaluate the appropriateness of the use of the BPMPM for this purpose.
(iii)Recommend and justify, two other model s viz., porter’s five forces model & the product life cycle model that could be used in making a divestment decision. Demonstrate how Neel Ltd. could utilize these models to make this decision.
(i)
Evaluation of the use of the concept of ROI by Neel Ltd.
ROI is an accounting measure that estimates the level of profits as a proportion of the capital employed over the year. Neel Ltd. uses ROI to check how well its divisions perform, which is a common practice. ROI shows profits compared to the capital used, but results can differ. A division that buys new assets may show lower ROI, while one with older, written-off assets may look better. Risk levels also vary between divisions.
ROI and cross subsidization:
Cross-subsidization makes ROI more complicated. If the head office controls investments, one division’s profits may be used to fund another. This can seem unfair, but it also helps t he company overall. Divisions with different business cycles can support each other, ensuring shareholders get steady returns. Use of ROI at each division will help in identification of financial health of each division.
(ii)
Application of Boston Product Market Portfolio Matrix (BPMPM) by Neel Ltd. in its divestment decision:
BPMPM aims to link the overall growth of the market for a product, the growth in the market share of a product, with the product’s cash -generative activities. BPMPM classifies a company’s products in terms of potential cash generation and cash expenditure requirements into cash cows, dogs, stars and question marks.
•Stars: High market share in a growing market. They need heavy investment now but can deliver big returns later. Over time, they often turn into cash cows.
•Cash cows: High market share but low growth. They need little investment and generate strong cash flow, which can fund stars.
•Question marks: Low market share in a growing market. The firm must decide whether to invest heavily to grow them or let them fade.
•Dogs: Low share in a stagnant market. They usually drain resources and should be phased out.
Appropriateness of use of BPMPM
BPMPM is conventionally assumed to apply to products and it is perhaps unusual to see it applied to businesses and divisions. The problem is that we do not know enough about the firm’s product range to suggest how the matrix could be ap plied.
Rather than assuming that a whole division is a dog and divesting it, it is possible that a thorough review of the product range of each division could be examined to see whether certain products can be pruned from the range. BPMPM should not be used in isolation. Further it needs to be modified from time to time.
(iii)
Models for making a divestment decision:
Many models are available, which could be used by the company in making a divestment decision. Two such models could be:
•Porter’s five forces model
•The product life cycle model
(a)Porter’s Five Forces Model:
This model can be used to place each division in the competitive context. The five forces model suggests that the competitive environment is determined by five factors viz.,
1.Threat of new entrants,
2.Threat of substitute products,
3.Bargaining power of customers,
4.Bargaining power of suppliers and
5.State of competitive rivalry within the industry.
The value of this model is that it examines each division’s strengths i n a competitive context. If the trend is for entry barriers to get lower, or if a major new entrant is on the horizon, this must influence the divestment decision, if the business is a marginal player in the market or if the resources required to fight off such a challenge are too expensive.
Similarly, if the customers are powerful or suppliers are powerful, then the margins would get eroded steadily and firm’s business would become less attractive. Further, if the threat of substitute products becomes serious, then divestment might become a sensible choice.
(b)The Product Life Cycle:
This model bears similarities to the BCG matrix and suggests that a firm’s products have a natural life cycle that can be analysed into the phases of introduction/ Embryonic, growth, maturity and decline/aging. In the introduction/embryonic phase, the product is introduced in the market. There is no or little competition. In the growth phase, market is strengthening as the sales increases. At maturity stage the market is completely stable with well-established base of customers and market shares are also stable. Customers are making repeated orders, but, with a lot of competitors, the company has to make efforts in differentiating their product from competitors. In the decline/aging phase, market volume shrinks as the demand declines.
Thus Neel Ltd. can use this model to examine the condition of the products in each of the divisions.
Source: ICSI Guideline Answers, June 2026, Q. 1(a) (Syllabus 2022).
(c)ABC Textiles Ltd., a Coimbatore-based cotton yarn manufacturer, has been facing market fluctuations due to rising competition and changes in export demand. The management is reviewing its strategic options and is considering whether to maintain its current operations, expand into new product lines, or exit unprofitable divisions.
Advise the management on the four grand strategic alternatives available to the company according to Glueck and Jauch’s framework (1984). Briefly explain each alternative with reference to the given scenario.
According to Glueck & Jauch (1984), an organization can choose from four grand strategic alternatives while planning at the corporate level:
1.Stability Strategy
•The stability strategy involves the maintenance of the current business definition by safeguarding the existing interests and strengths. It continues to peruse its well established tested goals and optimizes the resources committed to attain such goals.
Example : ABC Textiles Ltd. continues its current yarn production, improving productivity and cost efficiency instead of entering new markets.
2.Internal Growth Strategy
•An internal growth strategy involves re-defining of business definition by substantially scaling the level of operations through internal development and not taking help of other corporations or businesses. Market penetration, market development and product development are emphasised to develop new products, enter new markets and embracing new technology.
Example : ABC Textiles Ltd. launches a new range of blended fabrics or invests in new spinning technology to grow organically.
3.External Growth Strategy
•The company grows by acquiring, merging, or forming joint ventures with other businesses.
Example : ABC Textiles Ltd. acquires a smaller dyeing unit or partners with a garment manufacturer for forward integration.
4.Retrenchment Strategy
•The firm reduces its scope or scale of operations to improve profitability, either through cost reduction, divestment, or liquidation.
Example : ABC Textiles closes an underperforming unit or sells a non-core product line to stabilize finances.
Glueck & Jauch’s framework helps management align strategy with business performance and market realities by choosing between stability, growth, or retrenchment options.
Source: ICSI Guideline Answers, June 2026, Q. 2(c) (Syllabus 2022).
(iii)Explain Ansoff Growth Matrix. How does it help organisations in choosing growth strategies ? Are there any limitations to this growth strategy ?
The Ansoff Growth Matrix, developed by Igor Ansoff, is a strategic planning tool used to identify and evaluate growth opportunities based on products and markets. The four Strategies include:
1.Market Penetration (Existing Product – Existing Market)
Market penetration strategy is the preferred route to growth for many businesses because its focus is on selling more of the existing products to Current customers;
Customers similar to current customer base but who are buy ing competitors’ products; and who have need of product but aren’t buying it yet. The emphasis is on escalating market share by making some rigorous marketing promotions, or by creating more customer value.
2.Market Development (Existing Product – New Market)
This strategy helps the business to take the current products and find new markets for them. The strength of this option from the Ansoff Growth matrix is that it puts the pressure on the marketing and sales functions of the business and leaves the operations/supply side to concentrate on what it does best.
3.Product Development (New Product – Existing Market)
In product development, businesses continue to focus on the needs of existing customer base and also the widen customer market they represent but they seek to understand their underlying needs so they can see opportunities for new products.
4.Diversification (New Product – New Market)
Diversification is the risky growth strategy if it requires the development of new resources and capabilities. This option is the most controversial since diversification involves taking new products to new customers. The big advantage of diversification is that if it is successful, it reduces the overall risk of the business to factors outside of the control of the business like the wider economic environment, climate change etc.
Reasons for choosing Growth Strategies by the organizations
•It helps in systematic evaluation of growth options.
•It assists in risk assessment.
•It provides a clear strategic direction for expansion.
Limitations of Growth Strategy
•It oversimplifies complex business situations.
•It does not consider external environmental factors.
•It ignores internal capabilities and resources.
The Ansoff Matrix provides a structured approach to growth strategy selection, but should be used along with other strategic tools for effective decision-making.
Source: ICSI Guideline Answers, June 2026, Q. 2A(iii) (Syllabus 2022).
Business strategy focuses on :
(A)How a firm competes within a particular market or industry.
(B)Where a firm is going and the scope of its activities.
(C)Strategies related to diversification into different business lines.
(D)How to allocate resources between different parts of the business.
Answer: (A) How a firm competes within a particular market or industry.
Source: ICSI Guideline Answers (answer key), December 2024, Q. 69 (Financial and Strategic Management paper, Syllabus 2017).
Bike manufacturers ‘Honda’ and ‘Bajaj’ work on reducing their prices to sell their bikes in popular segment at attractive prices. This is example of :
(A)Growth Strategy
(B)Cost Leadership Strategy
(C)Turnaround Strategy
(D)Unique Strategy
Answer: (B) Cost Leadership Strategy
Source: ICSI Guideline Answers (answer key), December 2024, Q. 88 (Financial and Strategic Management paper, Syllabus 2017).
Which is generally the reason for adoption of divestment strategy ?
(A)Business acquired proves to be mismatch
(B)Persistent negative cashflows
(C)Severity of competition
(D)None of the above
Answer: (B) Persistent negative cashflows
Source: ICSI Guideline Answers (answer key), June 2024, Q. 86 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is a strategic alternative according to Glueck and Jauch ?
(a)Internal Growth
(b)Retrenchment
(c)Differentiation
(d)Cost Focus
Options :
(A)Both (c) and (d)
(B)Both (a) and (b)
(C)(b) only
(D)All of the above
Answer: (B) Both (a) and (b)
Source: ICSI Guideline Answers (answer key), December 2023, Q. 93 (Financial and Strategic Management paper, Syllabus 2017).
Which one of the following is NOT a level of diversification prescribed in Ansoff’s matrix ?
(A)Diversification into related markets
(B)Conglomerate Diversification with new product
(C)Diversification into unrelated markets using existing resources
(D)Diversification into unrelated markets using new resources
Answer: (B) Conglomerate Diversification with new product
Source: ICSI Guideline Answers (answer key), June 2021, Q. 84 (Financial and Strategic Management paper, Syllabus 2017).
Vertical integration may be beneficial when :
(A)Lower transaction costs and improved co-ordination are vital and achievable
(B)Flexibility is reduced, providing a more stationary position in the competitive environment
(C)Various segregated specialisations will be combined
(D)The minimum efficient scales of two corporations are different
Answer: (A) Lower transaction costs and improved co-ordination are vital and achievable
Source: ICSI Guideline Answers (answer key), December 2019, Q. 92 (Financial and Strategic Management paper, Syllabus 2017).
Conglomerate diversification is another name for which of the following ?
(A)Related diversification
(B)Unrelated diversification
(C)Portfolio diversification
(D)Acquisition diversification
Answer: (B) Unrelated diversification
Source: ICSI Guideline Answers (answer key), December 2019, Q. 93 (Financial and Strategic Management paper, Syllabus 2017).
(a)A private bank, as a part of Comprehensive Internal Management Study, has opted to modernise the banking system. The situation is very tough for the banking players in the current dynamic scenario. The CEO of the bank wants to initate the change whereas the Chairman wants to wait and watch to take any decision.
Analyse and evaluate the strategies of CEO and Chairman to bring about corporate change in the existing banking system.
Banking sectors across the globe are facing a lot of challenges & opportunities to grow. In the banking sector the emergence of both private and public player/parties have created competition among each other and an opportunity for the customers.
Customers have varied options to choose services offered by these banks. In such situation a private bank has two options to choose as put forth by its CEO and Chairman.
The CEO of the bank wants to modernize the bank and sees the current situation as an opportunity. So, if the bank opts for growth strategy, it may go ahead with the decision of CEO, as it helps to expand the activities to achieve growth in sales, assets, profits or some combination as it is needed for the bank to sustain in the long run.
Whereas, the Chairman of the bank wants to play safe by avoiding taking risk at a time when the situation is not very favorable. So he is opting for a stable strategy by making no change in the bank’s current activities without any significant change in direction.
It may be viewed as a lack of strategy by critic. As stability strategy may be appropriate for a successful organisation in a predictable environment. For any sector it is useful in the short run and can be dangerous if followed for too long.
Source: ICSI Guideline Answers, December 2018, Q. 5(a) (Financial and Strategic Management paper, Syllabus 2017).
(d)BCG analysis is mainly used for Multi-Category/Multi Product companies. All categories and products together are said to be the part of Business Portfolio. It aims to evaluate 1/2025/ SMCF/NS Contd each product, i,e., the goods and services of the business in two dimensions and the combination of both dimensions creates a matrix into which the products from the portfolio are placed below :
| Business growth rate | Product category | Product category |
| High | STAR | QUESTION MARK |
| LOW | CASH COW | DOG |
| Market share | High | Low |
Name the two dimensions and explain the terms ‘‘STAR, QUESTION MARK, CASH COW and DOG’’.
BCG analysis aims to evaluate each product, i.e. the goods and services of the business in two dimensions which are as follow:
i)Market growth
ii)Market share
CASH COW
Cash cows are products which have a high market share in a low growing market. As the business growth rate of market is low, cash cow gains the maximum advantage by generating maximum revenue due to its higher market share. Therefore, for any company, the cash cows is the category of products which require minimal investment but ensure higher returns. These higher returns raise the level of overall profitability of the firm because such excess revenue generation can be used in other businesses which carry products falling in the category of Stars, Dogs or Question marks.
STAR
The products or services falling in this category are best products/services in the product portfolio of any company. This is so because, for such category of products, both markets share as well as growth rate is high. Unlike cash cows, Stars cannot be complacent when they are top on because they can immediately be overtaken by another company which capitalizes on the market growth rate. However, if the strategies are successful, a Star can become a cash cow in the long run.
QUESTION MARK
Several times, a company might come up with an innovative product which immediately gains good growth rate. However, the market share of such a product is unknown. The product might lose customer interest and might not be bought anymore in which case it will not gain market share, the growth rate will go down and it will ultimately become a Dog.
On the other hand, the product might increase customer interest and more and more people might buy the product thus making the product a high market share product. From here the product can move on to be a Cash Cow as it has lower competition and high market share. Thus, Question marks are products which may give high returns but at the same time may also flop and may have to be taken out of the market. This uncertainty gives the quadrant the name “Question Mark”. The major problem associated with having Question marks is the amount of investment which it might need and whether the investment will give returns in the end or whether it will be completely wasted.
DOG
Relative Market Share = Your firm’s market share (or revenues) ÷ Largest competitor’s market share (or revenues)
Products are classified as dogs when they have low market share and low growth rate. Thus, these products neither generate high amount of cash nor require higher investments. However, they are considered as negative profitability products mainly because the money already invested in the product can be used somewhere else. Thus, over here businesses have to take a decision whether they should divest these products or they can revamp them and thereby make them saleable again which will subsequently increase the market share of the product.
Source: ICSI Guideline Answers, June 2025, Q. 2(d) (Syllabus 2022).
‘Build’, ‘Hold’, ‘Harvest’ and ‘Divest’ are the strategies followed in :
(A)Ansoff ’s Product Matrix Growth Matrix
(B)Value Chain Analysis
(C)Managerial Grid Matrix
(D)Boston Consulting Group Matrix
Answer: (D) Boston Consulting Group Matrix
Source: ICSI Guideline Answers (answer key), December 2024, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
‘Build,’ ‘Hold,’ ‘Harvest,’ and ‘Divest’ are the strategies pursued in :
(A)Boston Consulting Group Growth Share Matrix
(B)Value Chain Analysis
(C)Managerial Grid Matrix
(D)Ansoff’s Product Matrix Growth Matrix
Answer: (A) Boston Consulting Group Growth Share Matrix
Source: ICSI Guideline Answers (answer key), June 2024, Q. 85 (Financial and Strategic Management paper, Syllabus 2017).
Rate relating to Sky Ltd. is shown below, which product is cash cows among the following ?
| Product | Percentage | Market |
| Market Share | Growth rate | |
| Alpha | 65 | High |
| Beta | 30 | High |
| Gamma | 50 | Low |
| Delta | 15 | Low |
(A)Gamma
(B)Beta
(C)Delta
(D)Alpha
Answer: (A) Gamma
Source: ICSI Guideline Answers (answer key), December 2023, Q. 88 (Financial and Strategic Management paper, Syllabus 2017).
The BCG Matrix aims to evaluate each product in following two dimensions :
(A)Market growth & Market share
(B)Market Volatility & Market share
(C)Market volatility & Market strength
(D)Market growth & Market strength
Answer: (A) Market growth & Market share
Source: ICSI Guideline Answers (answer key), June 2023, Q. 84 (Financial and Strategic Management paper, Syllabus 2017).
are products which have a high market share in a low growing market.
(A)Stars
(B)Question Marks
(C)Dogs
(D)Cash Cows
Answer: (D) Cash Cows
Source: ICSI Guideline Answers (answer key), June 2023, Q. 85 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following strategies is not based on BCG matrix ?
(A)Build
(B)Hold
(C)Invest
(D)Divest
Answer: (C) Invest
Source: ICSI Guideline Answers (answer key), June 2023, Q. 86 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not a criticism of BCG Matrix ?
(A)The market share of the matrix does not guarantee profitability
(B)Both axes have been assigned the same value
(C)The matrix does not show what the competition is doing
(D)The matrix may not simplify the assessments of facts at all
Answer: (D) The matrix may not simplify the assessments of facts at all
Source: ICSI Guideline Answers (answer key), December 2022, Q. 89 (Financial and Strategic Management paper, Syllabus 2017).
What strategy shall be used for the products classified as Dogs in BCG matrix?
(A)New customer acquisition
(B)Divest
(C)Sales promotion
(D)Invest
Answer: (B) Divest
Source: ICSI Guideline Answers (answer key), June 2021, Q. 77 (Financial and Strategic Management paper, Syllabus 2017).
An organization that has a high market share position and competes in a lowgrowth industry is referred to as a .....................
(A)Dog
(B)Question Mark
(C)Star
(D)Cash Cows
Answer: (D) Cash Cows
Source: ICSI Guideline Answers (answer key), June 2021, Q. 79 (Financial and Strategic Management paper, Syllabus 2017).
In long run, when the growth rate slows down stars become :
(A)Question Marks
(B)Moon
(C)Dogs
(D)Cash Cows
Answer: (D) Cash Cows
Source: ICSI Guideline Answers (answer key), June 2021, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
Under the BCG growth-share matrix, low share, high-growth businesses or products are called :
(A)Stars
(B)Cash cows
(C)Question marks
(D)Dogs
Answer: (C) Question marks
Source: ICSI Guideline Answers (answer key), December 2019, Q. 67 (Financial and Strategic Management paper, Syllabus 2017).
What does Cash Cow symbolize in BCG matrix ?
(A)Volatility
(B)Unattractive Investment
(C)Profitability
(D)Cash Drain
Answer: (C) Profitability
Source: ICSI Guideline Answers (answer key), December 2019, Q. 73 (Financial and Strategic Management paper, Syllabus 2017).
Directional Policy Matrix is same as :
(A)the BCG Model
(B)the 9-cell GE Matrix
(C)the Life-cycle Portfolio analysis
(D)the 3 × 3 competitive positioning matrix
Answer: (B) the 9-cell GE Matrix
Source: ICSI Guideline Answers (answer key), December 2019, Q. 84 (Financial and Strategic Management paper, Syllabus 2017).
(b)In the context of Ansoff’s Product Market Growth Matrix, identify reason for the type of growth strategies followed in the following cases :
(i)A leading producer of toothpaste, advises its customers to brush their teeth twice a day to keep their breath fresh.
(ii)A business giant in the hotel industry decides to enter into the dairy business.
(iii)One of India’s premier utility vehicle manufacturing company ventures to foray into foreign markets.
(iv)A renowned auto manufacturing company lauches ungeared scooters in the market.
Ansoff’s product market growth matrix (proposed by Igor Ansoff) is a useful tool that helps businesses decide their product and market growth strategy. This matrix further helps to analyze different strategic directions. It is built around a two by two matrix. According to Ansoff, there are four strategies that organizations might follow:
(i)Market Penetration: Market penetration strategy is the preferred route to growth for many businesses because its focus is on selling more of the existing products to:
•Current customers;
•Customers similar to current customer base but who are buying competitors’ products;
•Customers similar to current customer base who have need of product but aren’t buying it yet.
A leading producer of toothpaste, advises its customers to brush their teeth twice a day to keep their breath fresh. It refers to a growth strategy where business focuses on selling existing products into existing markets.
(ii)Diversification: This option is the most controversial since diversification involves taking new products to new customers. Diversification into unrelated markets which require new resources and capabilities.
A business giant in the hotel industry decides to enter into the dairy business. It refers to a growth strategy where a business markets new products in new markets.
(iii)Market Development : One of the options suggested by Ansoff is to take the current products and find new markets for them. Entering new geographic markets by moving from local to regional to national and finally international. This may require the business to acquire new capabilities including exporting, understanding different cultures and language skills.
One of India’s premier utility vehicle manufacturing company ventures to foray into foreign markets. It refers to a growth strategy where the business seeks to sell its existing products into new markets.
(iv)Product Development : In product development, businesses continue to focus on the needs of existing customer base and also the widen customer market they represent but they seek to understand their underlying needs so they can see opportunities for new products
A renowned auto manufacturing company launches ungeared scooters in the market. It refers to a growth strategy where a business aims to introduce new products into existing markets.
Source: ICSI Guideline Answers, December 2025, Q. 2(b) (Syllabus 2022).
What is the term used in Ansoff’s matrix for increasing market share with existing products in existing markets ?
(A)Product development
(B)Market penetration
(C)Diversification
(D)Market development
Answer: (B) Market penetration
Source: ICSI Guideline Answers (answer key), June 2024, Q. 87 (Financial and Strategic Management paper, Syllabus 2017).
ABC Ltd has updated the packaging of its products as well as slightly reducing its selling price. According to Ansoff’s product/market matrix, which of the following strategies has ABC Ltd adopted ?
(A)Market development
(B)Product development
(C)Market penetration
(D)Diversification
Answer: (C) Market penetration
Source: ICSI Guideline Answers (answer key), December 2023, Q. 87 (Financial and Strategic Management paper, Syllabus 2017).
Match the following in the light of COCA- COLA’s SWOT analysis :
| A1 | Strength | B1 Pepsi biggest competitor | |||
| A2 | Weakness | B2 Olympic games sponsorship | |||
| A3 | Opportunity | B3 Loss | of market development opportunities | ||
| A4 | Threats | B4 Long | history with certain status |
(A)A1-B4; A2-B3; A3-B2; A4-B1
(B)A1-B4; A2-B2; A3-B3; A4-B1
(C)A1-B2; A2-B3; A3-B1; A4-B4
(D)A1-B2; A2-B3; A3-B4; A4-B1
Answer: (A) A1-B4; A2-B3; A3-B2; A4-B1
Source: ICSI Guideline Answers (answer key), June 2023, Q. 79 (Financial and Strategic Management paper, Syllabus 2017).
Match the four growth options of the Ansoff’s Growth Matrix :
| A1 Market Penetration | B1 new products and strategy current markets | |
| A2 Product development | B2 current products strategy and new markets | |
| A3 Market development | B3 current products strategy and current markets | |
| A4 Diversification | B4 new products and new markets |
(A)A1-B2; A2-B1; A3-B4; A4-B3
(B)A1-B2; A2-B1; A3-B3; A4-B4
(C)A1-B3; A2-B2; A3-B1; A4-B4
(D)A1-B3; A2-B1; A3-B2; A4-B4
Answer: (D) A1-B3; A2-B1; A3-B2; A4-B4
Source: ICSI Guideline Answers (answer key), June 2023, Q. 87 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not a growth option in Ansoff’s Growth Matrix ?
(A)Market Penetration Strategy
(B)Product Development Strategy
(C)Market Development Strategy
(D)None of the above
Answer: (D) None of the above
Source: ICSI Guideline Answers (answer key), June 2022, Q. 92 (Financial and Strategic Management paper, Syllabus 2017).
The strength of Market Development option of Ansoff’s Growth Matrix is that :
(A)It puts pressure on Marketing and Sales Function
(B)It puts pressure on Operations Function
(C)It puts pressure on Supply Function
(D)It puts pressure on Finance Function
Answer: (A) It puts pressure on Marketing and Sales Function
Source: ICSI Guideline Answers (answer key), June 2022, Q. 93 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following strategies of Ansoff’s Growth Matrix is referred as Suicide Cell ?
(A)Market Penetration
(B)Product Development
(C)Diversification
(D)Market Development
Answer: (C) Diversification
Source: ICSI Guideline Answers (answer key), June 2022, Q. 94 (Financial and Strategic Management paper, Syllabus 2017).
What is the term used in Ansoff’s matrix for increasing market share with existing products in new markets ?
(A)Market development
(B)Market penetration
(C)Product development
(D)Diversification
Answer: (A) Market development
Source: ICSI Guideline Answers (answer key), December 2020, Q. 85 (Financial and Strategic Management paper, Syllabus 2017).
Ansoff’s matrix is useful for :
(A)joining a business’s marketing strategy with general strategic direction
(B)establishing an editorial calendar for staff to follow
(C)understanding buyer personas and buyer behaviours
(D)hiring new staff and training them on marketing tactics
Answer: (A) joining a business’s marketing strategy with general strategic direction
Source: ICSI Guideline Answers (answer key), December 2019, Q. 68 (Financial and Strategic Management paper, Syllabus 2017).
Which is the term used in Ansoff’s matrix for increasing market share with existing products in existing markets ?
(A)Market Development
(B)Market Penetration
(C)Product Development
(D)Diversification
Answer: (B) Market Penetration
Source: ICSI Guideline Answers (answer key), December 2019, Q. 77 (Financial and Strategic Management paper, Syllabus 2017).
The product-market matrix comprising strategies of penetration, market development, product development and diversification was first formulated by :
(A)Ansoff
(B)Drucker
(C)Porter
(D)Prahlad
Answer: (A) Ansoff
Source: ICSI Guideline Answers (answer key), December 2019, Q. 82 (Financial and Strategic Management paper, Syllabus 2017).
As per ADL Matrix, the portfolio management involves the dimensions of :
(A)Market Assessment and Competitors Assessment
(B)Competitors Assessment and Customers Assessment
(C)Strategies Assessment and Market Assessment
(D)Environmental Assessment and Business Strengths Assessment
Answer: (D) Environmental Assessment and Business Strengths Assessment
Source: ICSI Guideline Answers (answer key), December 2024, Q. 85 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not an advantage of GE matrix ?
(A)It helps to prioritize the limited resources in order to achieve the best returns.
(B)It provides synergy benefit that could exist between two or more business units.
(C)Managers become more aware of how their products or business units perform.
(D)Identifies the strategic steps the company needs to make to improve the performance of its business portfolio.
Answer: (B) It provides synergy benefit that could exist between two or more business units.
Source: ICSI Guideline Answers (answer key), December 2023, Q. 70 (Financial and Strategic Management paper, Syllabus 2017).
If Industry Attractiveness is ‘Low’ and Business Strength is ‘Average’ , then which of the following strategy should be followed as per GE Matrix ?
(A)Invest/Expand
(B)Select/Earn
(C)Harvest/Divest
(D)Hold/Selective
Answer: (C) Harvest/Divest
Source: ICSI Guideline Answers (answer key), December 2023, Q. 90 (Financial and Strategic Management paper, Syllabus 2017).
The ADL Matrix is technique that is based on the :
(A)Market Growth Strategy
(B)Market Relative Share
(C)Strategic Business Units (SBU)
(D)Product Life Cycle
Answer: (D) Product Life Cycle
Source: ICSI Guideline Answers (answer key), December 2023, Q. 91 (Financial and Strategic Management paper, Syllabus 2017).
Identify steps that are involved in using the ADL Matrix :
(A)Identify the industry maturity category
(B)Determining competitive position
(C)Plot the position of the matrix
(D)All of the above
Answer: (D) All of the above
Source: ICSI Guideline Answers (answer key), December 2023, Q. 92 (Financial and Strategic Management paper, Syllabus 2017).
Which one is not an Industry Maturity or Life Cycle stage in ADL Matrix ?
(A)Embryonic
(B)Pre-Mature
(C)Mature
(D)Growth
Answer: (B) Pre-Mature
Source: ICSI Guideline Answers (answer key), June 2023, Q. 88 (Financial and Strategic Management paper, Syllabus 2017).
BCG Matrix is built around :
(A)Industry Attractiveness and Business Strength
(B)Industry Growth and Market Share
(C)Industry Attractiveness and Relative Market Share
(D)Industry Growth-rate and Business Strength
Answer: (B) Industry Growth and Market Share
Source: ICSI Guideline Answers (answer key), June 2022, Q. 91 (Financial and Strategic Management paper, Syllabus 2017).
The terms, build; hold; harvest; divest are closely linked with strategies of...................
(A)Ansoff Matrix
(B)BCG Matrix
(C)ADL Matrix
(D)GE Mckinsey Matrix
Answer: (B) BCG Matrix
Source: ICSI Guideline Answers (answer key), December 2021, Q. 80 (Financial and Strategic Management paper, Syllabus 2017).
‘Build,’ ‘Hold,’ Harvest’ and ‘Divest’ are the strategies explained by :
(A)Ansoff’s Product Matrix Growth
(B)ADL matrix
(C)GE McKinsey Matrix
(D)BCG Matrix
Answer: (D) BCG Matrix
Source: ICSI Guideline Answers (answer key), June 2021, Q. 80 (Financial and Strategic Management paper, Syllabus 2017).
GE Nine-cell Matrix is based on :
(A)Market growth rate and relative market share
(B)Market growth rate and business strength
(C)Market attractiveness and relative market share
(D)Market attractiveness and business strength
Answer: (D) Market attractiveness and business strength
Source: ICSI Guideline Answers (answer key), June 2021, Q. 83 (Financial and Strategic Management paper, Syllabus 2017).
The BCG matrix is based on :
(A)Industry attractiveness and business strength
(B)Industry growth rate and business strength
(C)Industry attractiveness and relative market share
(D)Industry growth and market share
Answer: (D) Industry growth and market share
Source: ICSI Guideline Answers (answer key), December 2019, Q. 75 (Financial and Strategic Management paper, Syllabus 2017).
(iv)Compare PERT and CPM-based on its :
•Meaning
•Orientation
•Model
•Focus
•Suitability.
| Basis for Comparison | PERT | CPM |
| Meaning | PERT is a project management | CPM is a statistical technique of project |
| technique, used to manage uncertain | management that manages well | |
| activities of a project | defined activities of a project | |
| Orientation | Event-oriented | Activity-oriented |
| Model | Probabilistic Model | Deterministic Model |
| Focus | Time | Time-cost trade-off |
| Suitability | Research and Development Project | Non-research projects like civil construction, ship building etc. |
Source: ICSI Guideline Answers, December 2025, Q. 2A(iv) (Syllabus 2022).
(c)“PERT and CPM are two complementing statistical techniques utilized in project management. They exhibit the flow and sequence of activities and events”. In this context mention the types of projects where these techniques are used. What are the steps involved in PERT/ CPM?
PERT and CPM are two complementary statistical techniques utilized in project management, which are network based scheduling methods that exhibit the flow and sequence of activities and events. They are used in variety of projects like construction of new plants, R&D of a new product, Space exploration projects, movie productions, ship building, road construction, relocation of a facility, MIS installation, advertisement campaigns etc.
The following steps are involved in PERT/CPM
1.Identify and distinguish the various activities required for completing the project and list them separately.
2.Clearly lay down the jobs that are to be carried simultaneously, in sequence etc. All such relationships between jobs be clearly laid down.
3.Picture/graph portraying each of these jobs should be drawn showing predecessor and successor relations among them. The graph shows the time required for completion of each job. This is known as the project graph or the arrow diagram.
Source: ICSI Guideline Answers, December 2024, Q. 2(c) (Syllabus 2022).
In projects like Civil Construction and Ship building, which of the following is more suitable ?
(A)PERT
(B)CPM
(C)Both
(D)Neither CPM nor PERT
Answer: (B) CPM
Source: ICSI Guideline Answers (answer key), December 2023, Q. 65 (Financial and Strategic Management paper, Syllabus 2017).
CPM computes the path of planned jobs/activities to logical end points/the end of the project, and the earliest and latest time by which each activity can start and finish without making the project longer. This process determines the activities that are ‘‘.......................’ or on the longest path and having ‘‘total float’’.
(A)Shortest; Crucial
(B)Shortest; Critical
(C)Longest; Critical
(D)Longest; Feasible
Answer: (C) Longest; Critical
Source: ICSI Guideline Answers (answer key), June 2023, Q. 83 (Financial and Strategic Management paper, Syllabus 2017).
Limitations of PERT include :
(A)Uncertainty about the estimate of time and resources as it is based on assumptions
(B)Costs may be higher than the conventional method of planning
(C)Not suitable for simple an repetitive processes
(D)All of the above
Answer: (D) All of the above
Source: ICSI Guideline Answers (answer key), June 2022, Q. 77 (Financial and Strategic Management paper, Syllabus 2017).
Dev Co. Ltd., Strategic Management Team now under the process of designing the strategic plan analysis and one of the plans using the terms SO, WO, ST, WT which is fit with matrix boxes of :
(A)TOWS Analysis
(B)SWOT Analysis
(C)CPM Analysis
(D)PERT Analysis
Answer: (A) TOWS Analysis
Source: ICSI Guideline Answers (answer key), December 2021, Q. 81 (Financial and Strategic Management paper, Syllabus 2017).
PERT and CPM two complementary statistical techniques utilized in ..................
(A)Event based scheduling methods
(B)Activity time-based scheduling methods
(C)Network based scheduling methods
(D)Project modeling methods
Answer: (C) Network based scheduling methods
Source: ICSI Guideline Answers (answer key), December 2021, Q. 83 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not correct related with reference to PERT ?
(A)Compels managers to plan their projects critically in considerable detail from beginning to the end and analyse all factors affecting the progress of the plan.
(B)Provides management a tool for forecasting the impact of schedule changes. The likely trouble spots are located early enough to take preventive measures or corrective actions.
(C)A considerable amount of data may be presented in precise manner. The task relationships are presented graphically for easier evaluation.
(D)The PERT time is based upon 5-way estimate and hence is the most objective time in the light of uncertainties and results in greater degree of accuracy in time forecasting.
Answer: (D) The PERT time is based upon 5-way estimate and hence is the most objective time in the light of uncertainties and results in greater degree of accuracy in time forecasting.
Source: ICSI Guideline Answers (answer key), June 2021, Q. 87 (Financial and Strategic Management paper, Syllabus 2017).
Which can be termed as disadvantage of PERT ?
(A)Compels managers to plan their projects critically in considerable detail from beginning to the end and analyse all factors affecting the progress of the plan
(B)Provides management a tool for forecasting the impact of schedule changes. The likely probable spots are located early enough to take preventive measures or corrective actions.
(C)A considerable amount of data may be presented in a precise manner.
(D)The costs may be higher than the conventional methods of planning and as it needs a high degree of planning skill and minute details resulting in rise in time and manpower resources.
Answer: (D) The costs may be higher than the conventional methods of planning and as it needs a high degree of planning skill and minute details resulting in rise in time and manpower resources.
Source: ICSI Guideline Answers (answer key), December 2020, Q. 84 (Financial and Strategic Management paper, Syllabus 2017).
( a )Elite Kitchenware Co., a multinational company, is undergoing a feasibility study to introduce a new line of high-end kitchen appliances aimed at a specific group of customers. These appliances are designed for individuals with distinctive preferences and special requirements. The product is not standard, and the target market is narrow. The company understands that the demand for this product is large enough to be profitable but small enough to be overlooked by other major industry players. Elite Kitchenware Co. aims to position itself in this niche market by offering unique features tailored to the target market.
In this scenario, identify the generic strategy suggested by Michael Porter. Also, state the pros and cons of such a strategy.
Elite Kitchenware Co. has adopted Focused Differentiation Strategy which is one of Michael Porter’s Generic strategies. It is a form of strategy approach that, as its name suggests, focuses on developing a product that is unique for a certain client market group. When a business adopts the differentiation strategy approach, it concentrates on reducing the size of the targeted client segment by providing unique and personalized features in the product.
For example, Coca-Cola introduced diet coke and coke zero to appeal to consumers who are health-conscious.
Pros of using Focus Strategy
a)Availability of Resources : It is crucial to have the necessary financial and other resources available when organization plan to adopt the targeted strategic approach. The price of manufacturing the correct product for the particular customer market segment is higher. Yet, if a business is using scarce resources to create a rare product, it needs to ensure that those resources are available.
b)Competitive Edge: Gaining a competitive edge is the crucial component of putting the concentrated strategic approach into practise. When a business makes a distinctive offer to a certain client market segment, it will be easy to stand out from the competition. When organization provides its clients something worthwhile, it will be tough for your rivals to quickly imitate it.
c)High Growth: Companies and corporations should never forget that there is always potential for expansion. Businesses and firms who are not evolving with the times and the market find it challenging to thrive. The organization should assess the segment’s growth prospects before focusing on it as a target market segment.
d)Increased Profitability: The smaller client market niche is simple to locate and cater to. Yet, it is important to consider whether the market niche you are aiming for is profitable. It’s because creating wealth and consequently making profit is always a company or business’s primary goal. Such market groupings need to be sizable enough to bring in money.
Cons of using Focus Strategy
a)Changing Preferences: Customers’ preferences and choices are always shifting. and they strive to reflect the consensus opinion. When a business provides a unique offering that matters to the customer, they will choose it and it will last longer.
b)High Competition: A focused strategic strategy seeks to gain a competitive edge by providing something special and worthwhile. Being ahead of the competition is challenging since they are constantly trying to get better. The organization must monitor its development and take the offering seriously. The market’s increased competition reduces the company’s profitability.
Source: ICSI Guideline Answers, December 2024, Q. 2(a) (Syllabus 2022).
(c)Michael E. Porter has suggested three generic strategies.
Briefly explain :
(i)Basic objective to follow a generic strategy
(ii)Identify the type of strategy used in the following examples :
(I)Bell Computer has decided to rely exclusively on direct marketing.
(II) “Our basic strategy was to charge a price so low that microcomputer makers couldn’t do the software internally for that cheaply.”
(III) ‘DNTV’, a TV Channel has identified a profitable audience niche in the electronic media. It has further exploited that niche through the addition of new channels like ‘DNTV’ Profit and ‘Image’.
According to Michael E. Porter, strategies allow organisations to gain competitive advantage to for long-time survival and growth, from three different bases: cost leadership, differentiation, and focus. These bases form different generic strategies as under:
•The Cost leadership strategy also involves the firm winning market share by appealing to cost-conscious or price-sensitive customers. This is achieved by having the lowest prices in the target market segment, or at least the lowest price to value ratio (price compared to what customers receive).
•Differentiation is appropriate where the target customer segment is not price-sensitive, the market is competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy.
•The focus strategy is also known as ‘niche’ strategy. This is so because, companies adopting focus strategies focus on niche markets and, by get hold of the dynamics of such niche market and unique requirements of its customers
In the given examples, the generic strategies that are being followed are given below:
i.Differentiation: Bell Computer is differentiating on product delivery. Computer market is highly competitive and the products are very similar.
ii.Cost Leadership: Keeping the prices low so that microcomputer makers acquire the software rather than developing themselves is a case of cost leadership.
iii.Focus: DNTV has identified a profitable area (audience niche) and is focusing on it.
Source: ICSI Guideline Answers, June 2024, Q. 2(c) (Syllabus 2022).
According to Porter’s generic strategy model, Mercedes-Benz C-Class could sell its cars as most expensive ones, is an example of :
(A)The Cost Leadership Strategy
(B)The Differentiation Strategy
(C)The Focus Strategy
(D)Combination Strategies
Answer: (B) The Differentiation Strategy
Source: ICSI Guideline Answers (answer key), June 2021, Q. 85 (Financial and Strategic Management paper, Syllabus 2017).
In Porter’s Generic Strategies model, a focus strategy includes :
(A)Selling a high range of products
(B)Selling products that require less cost to produce
(C)Selling to premium customers
(D)Selling to a niche market
Answer: (D) Selling to a niche market
Source: ICSI Guideline Answers (answer key), June 2021, Q. 86 (Financial and Strategic Management paper, Syllabus 2017).
Porter’s generic strategies are :
(A)Low price, differentiation, focus
(B)Cost leadership, differentiation, cost focus, differentiation focus
(C)Price leadership, differentiation, focus
(D)Low cost, differentiation, focus differentiation
Answer: (B) Cost leadership, differentiation, cost focus, differentiation focus
Source: ICSI Guideline Answers (answer key), December 2020, Q. 86 (Financial and Strategic Management paper, Syllabus 2017).
Porter’s Generic strategies include :
(A)Cost Differentiation, Product Focus, Leadership
(B)Price Leadership, Cost Focus, Product Differentiation
(C)Price Differentiation, Leadership, Cost Focus
(D)Cost Leadership, Differentiation and Focus
Answer: (D) Cost Leadership, Differentiation and Focus
Source: ICSI Guideline Answers (answer key), December 2019, Q. 100 (Financial and Strategic Management paper, Syllabus 2017).