ACCA Strategic Business Leader (SBL) Practice Exam

Which strategic tool can help in making recommendations about product portfolios?

1. Porter's Five Forces

2. The strategic clock

3. The BCG matrix

4. The Diamond model

The correct answer is: The BCG matrix

The BCG matrix is a strategic tool specifically designed to assist in making recommendations regarding product portfolios. It categorizes a company's products or business units into four quadrants based on two key dimensions: market growth rate and relative market share. This classification helps businesses assess the potential of their product offerings. In the BCG matrix, products are labeled as Stars, Cash Cows, Question Marks, or Dogs. Stars have high market share in fast-growing industries and require investment to maintain their position. Cash Cows hold a large market share in slower-growing markets and generate significant revenue with minimal investment. Question Marks, while belonging to growing markets, require careful consideration due to their uncertain potential, and Dogs have low market share in stagnant markets and may be candidates for divestiture. By utilizing the BCG matrix, companies can make informed strategic decisions about where to allocate resources, adjust priorities within their product portfolio, and identify areas for growth or potential divestment. This tool provides a clear visual representation of the product portfolio, allowing for effective strategic planning. Other options, while valuable in various contexts, do not directly focus on product portfolio recommendations. Porter's Five Forces analyses the competitive environment, the strategic clock evaluates competitive positions but not specifically for product management, and