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8 October, 19:27

You would like to invest in one of the profitable business units of a multinational corporation. In a meeting with management, you explain that you'll only consider a unit categorized, according to the BCG matrix, as a question mark. Here are your choices:Unit A has revenue of $27 billion and a profit of $6 billion. While its product is based on a new technology that is rapidly increasing in sales, the product currently lags the market share of competitors. Unit B has revenue of $30 billion and a profit of $7 billion. Its market share is strong and growing. While its product is based on an outdated technology, the product has a loyal following for now. Which of the corporation's two profitable units meets your criterion?

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  1. 8 October, 19:35
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    Unit A has revenue of $27 billion and a profit of $6 billion. While its product is based on a new technology that is rapidly increasing in sales, the product currently lags the market share of competitors.

    Explanation:

    According to the BCG Matrix, question marks are business units that operate in rapidly growing markets but currently only possess a low market share.

    This results in a lot of cash being consumed by the business unit, but also the possibility of high growth. It is called a question mark because it is uncertain if the business unit will be successful or not. This means that they are very risky investments.
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