Strategic Choices

Original descriptive practice: 30 original cases, 3 at 3 marks, 21 at 5 and 6 at 10. Stability/growth/integration/innovation/mergers/alliances; turnaround/divestment/liquidation/combination; Ansoff/ADL/BCG/GE. Original preparation, not official questions, marking schemes or complete official bank. Native tables scroll on phones.

Boundaries: Product-market novelty and model cutoffs are explicit. SM4 resolves SM3 growth-label conflicts. BCG uses market growth and relative share, not absolute share/profit alone. GE/ADL guidance is conditional. Transaction tone, synergy, red-zone loss and innovation claims are not guarantees. Liquidation/combination overview is not detailed legal coverage.

SM-C04-D001 · 3 marks

A group chooses which businesses to own, a division chooses how to compete and HR designs a staffing plan. Distinguish directional, competitive and functional strategy. (3 marks)

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Marks	Credit	Working / case application
1	Corporate	Business scope/resource direction is group-level corporate choice.
1	Business	Cost/differentiation/focus bases shape how a division competes.
1	Functional	HR supports execution within its function; scope/competition labels do not replace one another.

Original indicative capped marking, not official ICAI scheme. Two-mark sections require sound concept plus developed case application/reasoning. Equivalent justified answers accepted without duplicate credit. Explicit model definitions/cutoffs and source limitations apply; no guaranteed financial outcome or transaction authority.

Official concept source, PDF page 3

SM-C04-D002 · 5 marks

A mature firm keeps its product-market scope but improves efficiency and service. A manager calls stability doing nothing. Assess. (5 marks)

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Marks	Credit	Working / case application
1	Scope	Stability keeps current business/product markets and incremental aims.
1	Action	Efficiency/resource use and service still need attention.
1	Reasons	Maturity/share retention or consolidation after growth can fit.
1	Resources	Limited fresh investment may be needed, but not necessarily none.
1	Limit	Stable posture is not risk-free or immune to dynamic conditions; review fit rather than infer guaranteed returns.

Official concept source, PDF page 5

SM-C04-D003 · 3 marks

After rapid growth, a firm temporarily consolidates. Another substantially increases product/market scope and investment. Compare direction and risks. (3 marks)

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Marks	Credit	Working / case application
1	Stability	Consolidation maintains scope while improving efficiency.
1	Expansion	Significant scope/activity/investment growth can use several routes.
1	Limit	Expansion can offer opportunities but unknown risks; stability can still face obsolescence. Neither label guarantees reward or one universal risk ranking.

Official concept source, PDF page 7

SM-C04-D004 · 5 marks

A firm invests internally in existing customers and a new related line, then considers buying another business or forming an alliance. Explain internal/external growth and overlap. (5 marks)

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Marks	Credit	Working / case application
1	Internal	Use own resources/capabilities for intensification or diversification.
1	External	Mergers/acquisitions/alliances use relationships or transactions with other firms.
1	Intensification	Penetration, product development and market development are product/market routes.
1	Diversification	New products/new markets require relation/fit assessment.
1	Overlap	Product-market direction and execution route differ: diversification can be built or acquired. A heading in the source does not make internal growth the only way.

Official concept source, PDF page 8

SM-C04-D005 · 10 marks

Birch sells existing kettles in its home market. It proposes more kettle use there, the same kettle in a new region, a substantially new related appliance to current customers and a new unrelated service to new customers. Classify all four, resource needs and source reconciliation. (10 marks)

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Marks	Credit	Working / case application
2	Penetration	Existing product/existing market: increase usage/share among current customers. Promotion/service may help, but no new product is assumed.
2	Market development	Existing kettle/new geographical market: test channels, customer fit and local conditions. New geography differs from merely more sales in the same market.
2	Product development	New/modified product to existing customers uses product development. Assess required capability and whether customers value it; shared customers do not eliminate product risk.
2	Diversification	New service/new customers is diversification; unrelated technology/customer needs may make it conglomerate. Assess expertise/resources rather than assume revenue gains.
2	Reconcile/limits	SM 4 pages 9/24-25 state the axes clearly and correct SM 3 p 32 mislabels. Define novelty relative to the existing business; models classify options, not guarantee the least-risk/best investment.

Official concept source, PDF page 24

SM-C04-D006 · 5 marks

A drink firm uses a new delivery channel to reach a genuinely new customer segment without changing the drink. Is it necessarily product development? Explain. (5 marks)

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Marks	Credit	Working / case application
1	Axes	Drink remains existing product; customer market changes.
1	Label	Existing/new implies market development under the stated boundary.
1	Channel	Channel change helps access but alone does not prove market novelty if customers are the same.
1	Evidence	Define baseline customers/geography before classifying.
1	Limit	No actual channel contract or current local law is supplied; test fit/cost rather than infer guaranteed demand.

Official concept source, PDF page 9

SM-C04-D007 · 5 marks

A garment firm adds footwear using shared channels/brand; it also considers a specialised mining business with no supplied links. Compare concentric/conglomerate and synergy risks. (5 marks)

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Marks	Credit	Working / case application
1	Related	Shared channels/brand/product link can support concentric diversification.
1	Unrelated	No meaningful product/market/technology link supports conglomerate label.
1	Benefit	Related skills/assets may enable synergy or learning.
1	Risk	Unrelated areas can need new expertise/oversight; returns/correlation need analysis.
1	Limit	Diversification does not automatically reduce risk or justify subsidising persistent losses; linkages require evidence.

Official concept source, PDF page 10

SM-C04-D008 · 5 marks

A coffee processor builds a bean farm, opens retail cafes and buys a similar processor. Classify integration directions. (5 marks)

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Marks	Credit	Working / case application
1	Backward	Input-provider farm is earlier in the value chain.
1	Forward	Cafes/distribution move toward buyers/end use.
1	Horizontal	Similar processor operates at the same stage.
1	Scope	Vertical remains linked process sequence; horizontal same-stage relation is distinct.
1	Limit	Purchases/building are implementation routes; benefits and legal/contract approvals are not established by classification.

Official concept source, PDF page 11

SM-C04-D009 · 5 marks

A firm automates repetitive work and develops a customer-valued product but says all innovation guarantees profit and needs little marketing. Assess. (5 marks)

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Marks	Credit	Working / case application
1	Problem	Innovation may solve real customer/society problems.
1	Productivity	Automation/process simplification may improve output use.
1	Advantage	Valued differences may support position/retention.
1	Cost	Research, implementation and adoption need cost/feasibility review.
1	Limit	Source positive claims are aims, not certainty; promotion, competitive reaction, failure and environmental effects still matter.

Official concept source, PDF page 13

SM-C04-D010 · 10 marks

Oak Foods has spare processing skill, a common retailer channel and capital constraints. It considers a related snack line, owning a supplier, acquiring a similar rival and unrelated software services. Assess direction/route, synergies and priorities without choosing automatically. (10 marks)

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Marks	Credit	Working / case application
2	Snack	Related line can share processing/channel capabilities; test demand, added cost and fit. Product/market novelty determines development/diversification separately from relation.
2	Supplier	Input business is backward integration if within linked chain. Supply reliability/control may help but ownership brings capital/management risks; contracts could be alternatives.
2	Rival	Same-stage acquisition is horizontal integration/external growth. Assess duplication, price, integration and competition rules before treating scale as net synergy.
2	Software	No supplied common expertise/customer link makes the service unrelated diversification. New competence/oversight and capital demand may strain the firm; no automatic risk reduction follows.
2	Priorities	Compare expected benefits, resources, coordination costs and strategic purpose under the capital limit. Classification supports evaluation but authorises no transaction and does not prove one best option.

Official concept source, PDF page 12

SM-C04-D011 · 5 marks

Two firms combine operations while another purchases control of a target. A manager says mergers must be friendly and acquisitions always hostile. Explain and qualify. (5 marks)

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Marks	Credit	Working / case application
1	Combination	Merger concept combines organisations; control purchase is acquisition.
1	Purpose	Both can support growth and resource/capability combinations.
1	Mechanics	Actual legal structure, ownership/control and terms distinguish a deal.
1	Stereotype	Friendliness/relative strength is not an infallible definition; inspect actual transaction.
1	Limit	Source page 15 simplifies tone/legal mechanics; no current corporate-law treatment or deal authority established.

Official concept source, PDF page 15

SM-C04-D012 · 5 marks

A pack maker combines with a similar maker, its supplier, a related kitchen-products business and an unrelated transport venture. Classify four types and warn about ambiguous overlap. (5 marks)

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Marks	Credit	Working / case application
1	Horizontal	Same-stage direct rival combination.
1	Vertical	Linked earlier/later production/distribution stages.
1	Co-generic	Related production/market/technology link without same-stage/direct chain facts.
1	Conglomerate	No important supplied product/market/technology link.
1	Boundary	Actual links can overlap; do not classify solely from a name or assume every related firm is direct competitor.

Official concept source, PDF page 16

SM-C04-D013 · 3 marks

Two independent firms share research contribution, benefits and control while remaining separate. Distinguish alliance from acquisition. (3 marks)

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Marks	Credit	Working / case application
1	Independence	Partners maintain separate entities rather than one taking overall control.
1	Cooperation	Shared contributions/benefits/control serve agreed objectives.
1	Scope	Alliance terms/rights/expiry matter; a label does not settle joint-venture/legal form or authorise information sharing.

Official concept source, PDF page 17

SM-C04-D014 · 5 marks

A small device firm collaborates for technology, production scale and overseas channels. Apply organisational/economic/strategic/political advantages and scope limits. (5 marks)

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Marks	Credit	Working / case application
1	Organisation	Learn capabilities, access capacity/channels and possibly legitimacy.
1	Economics	Share costs/risks and possible scale/co-specialisation benefits.
1	Strategy	Pool resources for products/research and future opportunities.
1	Political/context	Local partnership can aid entry understanding, not automatically bypass actual laws or justify improper influence.
1	Limits	Each claimed gain needs terms/evidence; collaboration is not permission for collusion or secrets disclosure.

Official concept source, PDF page 17

SM-C04-D015 · 10 marks

Fern proposes research with a foreign partner, distribution access and pooled manufacturing. Both stay separate and share benefits/control. Staff fear secret leakage and future rivalry. Evaluate gains, sharing risks and governance. (10 marks)

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Marks	Credit	Working / case application
2	Gains	Complementary research/channels/capacity may aid objectives neither can readily achieve alone. Verify real complementarity and capability, not reputation alone.
2	Economics	Cost/risk distribution and scale can help if integration/coordination costs do not exceed gains. Shared benefits require agreed contribution and return terms.
2	Secrets	Sharing knowledge/resources/profits can expose trade secrets. Define permitted disclosures/access and protection in appropriate terms; agreements are not absolute enforcement guarantees.
2	Future rival	An ally may separate and compete. Consider dependency, knowledge transfer, exit arrangements and continuity, not automatic permanent trust.
2	Governance	Separate entities need clear control, contribution, responsibilities and monitoring. Country-rule assessment remains required; no agreement/signing/disclosure is authorised by this fictional review.

Official concept source, PDF page 18

SM-C04-D016 · 5 marks

A firm improves internal efficiency to reverse decline, sells one division and may close all activities. Distinguish turnaround, divestment and liquidation. (5 marks)

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Marks	Credit	Working / case application
1	Turnaround	Attempts to reverse poor performance through efficiency/strategic correction.
1	Divestment	Sells/liquidates part of the business or a unit, not necessarily all.
1	Liquidation	Abandons activities totally in the strategic overview.
1	Scope	Closure/sale can coexist with survival elsewhere.
1	Limit	This source gives brief liquidation overview, not detailed insolvency law, distribution/employee rights or authority to close.

Official concept source, PDF page 18

SM-C04-D017 · 5 marks

A company remains profitable but loses share, has weak products/negative operating cash flow and low morale. Must it wait for accounting losses before turnaround? Explain. (5 marks)

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Marks	Credit	Working / case application
1	Judgment	No: poor performance can mean subtarget growth/profit or unclear future, not only loss.
1	Signals	Persistent negative cash flow and declining share need investigation.
1	Product/assets	Uncompetitive offerings/deterioration may reveal strategic issues.
1	People	Turnover, staffing/morale and management problems can matter.
1	Diagnosis	Assess causes/viability rather than infer legal insolvency or automatic layoffs from signs.

Official concept source, PDF page 19

SM-C04-D018 · 5 marks

A distressed firm wants cuts immediately without diagnosing causes or a viable core. Explain assessment, strategic planning and bridge-finance checks. (5 marks)

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Marks	Credit	Working / case application
1	Assessment	Identify roots and extent of damage, not symptoms alone.
1	Priorities	Focus immediate correction on essential problem areas.
1	Viability	Assess survival prospects and viable core.
1	Plan	Define goals/functional actions using resources and competitive strengths/weaknesses.
1	Finance	Check bridge funds and short/long-term needs; hypothetical finance availability is not proved by a plan.

Official concept source, PDF page 19

SM-C04-D019 · 5 marks

A recovery firm stops urgent cash leakage, then changes product mix/assets and later improves customer service. Explain remaining turnaround stages and success evidence. (5 marks)

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Marks	Credit	Working / case application
1	Emergency	HR/finance/marketing/operations actions aim to stabilise positive cash flow.
1	Restructure	Forecast cash, assess assets/debts/core and reposition relevant products/markets.
1	People	Build morale and appropriate incentives/coordination.
1	Normal	Evidence of profitability/returns supports careful new products/service/alliance improvements.
1	Limit	Stages can overlap; return to normal is evidenced, not guaranteed by completing a checklist or raising funds.

Official concept source, PDF page 20

SM-C04-D020 · 10 marks

Pine has persistent negative operating cash, weak dispatch, viable core customers and an unprofitable unrelated division. Credit limits are uncertain. Managers propose across-the-board cuts and a new expansion loan. Apply five recovery stages with feasibility and authority limits. (10 marks)

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Marks	Credit	Working / case application
2	Assess	Diagnose cash/dispatch/division causes and damage. Protect essential customer service while testing which issues are urgent, not assume all costs are waste.
2	Plan	Evaluate core viability, competitive position and available resources/bridge finance. Specific goals/actions should fit evidence; uncertain credit is a constraint, not approved funding.
2	Emergency	Prepare dated cash actions, cost/working-capital review and high-potential product priorities to stop leakage. Debt changes, staff measures or sales require actual terms/permission; no blanket unpaid dues plan.
2	Restructure	Review assets/debts/product mix and dispatch capability; assess sale/exit of the unrelated unit if fit/returns warrant. Build morale and coordination instead of indiscriminate cuts.
2	Normal	Track cash/service/profit/returns, then cautiously consider improvements. Expansion loan is not automatically a turnaround solution; borrowing cost, commitments and performance need review, with no guaranteed recovery.

Official concept source, PDF page 20

SM-C04-D021 · 5 marks

An acquired division cannot integrate and drains cash needed by a viable core. Explain reasons, relation to turnaround and evidence before sale. (5 marks)

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Marks	Credit	Working / case application
1	Mismatch	Failure of strategic/operating integration can support review.
1	Cash	Persistent negative unit cash can harm the group.
1	Alternatives	Competition/upgrade constraints or better investment possibilities may matter.
1	Sequence	Turnaround often precedes divestment but can be bypassed if divestment clearly fits; not a universal mandatory order.
1	Decision	Evaluate price, viability, resources/obligations and alternatives; no stigma or automatic permission to sell.

Official concept source, PDF page 21

SM-C04-D022 · 5 marks

A group preserves a mature line, expands a promising service and retrenches a weak unit. Explain combination strategy and corporate coordination. (5 marks)

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Marks	Credit	Working / case application
1	Definition	Combine stability/growth/retrenchment to fit business needs.
1	Different units	The three units need not share the same direction.
1	Resources	Coordinate funds/capability rather than let weak units drain all alternatives.
1	Timing	Directions may operate together or in phases depending facts.
1	Scope	Supported by broad overview page 5, not a detailed universal recipe; assess corporate intent/risks rather than automatically expand every star.

Official concept source, PDF page 5

SM-C04-D023 · 5 marks

A business has a tenable position in an ageing industry. Explain ADL axes, positions and qualified use. (5 marks)

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Marks	Credit	Working / case application
1	Axes	Industry maturity environmental stage versus competitive position/business strength.
1	Stages	Embryonic, growth, mature, ageing.
1	Positions	Dominant, strong, favourable, tenable, weak.
1	Tenable	Can perform satisfactorily but vulnerable to stronger competition.
1	Use	Ageing/tenable table suggests divest/retrench options, not compulsory exit; evidence, resources and alternative outlook matter.

Official concept source, PDF page 25

SM-C04-D024 · 5 marks

A protected leader has broad freedom, a fragmented-market contender some freedom, and a vulnerable but adequate firm limited defence. Distinguish dominant/strong/favourable/tenable/weak. (5 marks)

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Marks	Credit	Working / case application
1	Dominant	Rare position, potentially protected technological leadership/monopoly in the model.
1	Strong	Considerable strategic freedom without position easily threatened.
1	Favourable	Reasonable freedom often within fragmented competition.
1	Tenable	Satisfactory performance but vulnerability to stronger proactive firms.
1	Weak	Generally poor performance with possible improvement; titles must be supported by facts, not firm size alone.

Official concept source, PDF page 27

SM-C04-D025 · 10 marks

Use supplied high market growth>=10% and high relative share>=1, relative share=unit share/largest other competitor. Units A growth 15%,share 30/rival 20; B 3%,40/20; C 12%,10/25; D 2%,5/20. Classify, explain resource options and limitations. (10 marks)

Market growth percent; unit/rival shares use same defined market and period. Cutoffs stipulated in question.

Unit	Growth%	Unit share%	Largest other share%
A	15	30	20
B	3	40	20
C	12	10	25
D	2	5	20

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Marks	Credit	Working / case application
2	A	Relative 1.5 and high growth => star. May need investment to sustain growth/position; positive profit or high absolute share alone would not classify.
2	B	Relative 2 and low growth => cash cow. Consider holding and verified cash support for other units, not assume automatic surplus regardless costs/investment.
2	C	Relative 0.4 and high growth => question mark. Assess build potential or alternatives; growing market does not guarantee gaining share is easy or every question mark becomes star.
2	D	Relative 0.25 and low growth => dog. Assess harvest/divest/continued niche role; some dogs can sustain themselves or support other units, so no automatic liquidation.
2	Limits	Cutoffs/market boundaries and rival denominator are stipulated. Measurement/SBU definition can be hard; labels classify current position and require capability/cash/risk assessment, not mechanical future funding.

Official concept source, PDF page 28

SM-C04-D026 · 5 marks

A portfolio plan forgoes current earnings to raise share, protects another unit's share, maximises short-term cash in a third and sells a fourth. Explain four post-BCG strategies. (5 marks)

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Marks	Credit	Working / case application
1	Build	Increase share with possible near-term earnings sacrifice.
1	Hold	Preserve share.
1	Harvest	Increase short-term cash despite possible long-term effects.
1	Divest	Sell/liquidate business where resources better used elsewhere.
1	Limit	Role selection needs evidence; each cell is not an automatic single strategy or transaction approval.

Official concept source, PDF page 29

SM-C04-D027 · 5 marks

A new product has 60% absolute share, immediate profit and heavy marketing but no market growth/rival shares given. A manager declares it a star. Assess. (5 marks)

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Marks	Credit	Working / case application
1	Share	Absolute 60% does not by itself supply relative share without denominator.
1	Growth	Need defined market-growth evidence, not only company sales growth.
1	Investment	Heavy spend can occur in several situations; it is not a substitute axis.
1	Profit	Immediate profit does not prove cash cow or star.
1	Boundary	Source Coufix page 29-30 incomplete case not copied as settled; request missing model facts and define cutoffs before classification.

Official concept source, PDF page 29

SM-C04-D028 · 5 marks

A firm evaluates market size/growth/profitability/risk and its share/margin/brand/distribution/technology. Explain GE and how it differs from BCG. (5 marks)

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Marks	Credit	Working / case application
1	Attractiveness	Market assessment uses multiple factors beyond growth.
1	Strength	Firm assessment includes capabilities/position beyond share.
1	Grid	High/medium/low x strong/average/weak yields 9 cells.
1	Choices	Invest/expand,select/earn,harvest/divest are broad guidance with discretion.
1	Limits	Weights/scales and trade-offs require explicit assumptions; red zone does not guarantee losses and green is not spending authority.

Official concept source, PDF page 30

SM-C04-D029 · 5 marks

Supplied 1-5 ratings/weights: attractiveness growth 4*.4,profit 3*.35,risk-favourability 2*.25;strength share 4*.3,distribution 3*.3,technology 5*.4. Cutoffs high>=3.5,medium>=2.5 else low for both dimensions. Compute and interpret. (5 marks)

Supplied ratings1-5; weights sum1 in each dimension. Higher risk-favourability means safer.

Dimension	Ratings	Weights
Attractiveness	4,3,2	.4,.35,.25
Strength	4,3,5	.3,.3,.4

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Marks	Credit	Working / case application
1	Attractiveness	1.6+1.05+.5=3.15, medium.
1	Strength	1.2+.9+2=4.1, high/strong.
1	Cell	Medium attractiveness/strong strength is invest/expand in the source grid.
1	Sensitivity	Ratings/weights subjective; verify scale direction and underlying evidence.
1	Limit	A model recommendation is conditional, not guaranteed return or authority to invest; consider cash/risk/fit.

Official concept source, PDF page 31

SM-C04-D030 · 10 marks

Acorn keeps a mature line efficient, sells an existing product in a genuinely new region and considers acquiring a related input supplier. A weak unrelated unit drains cash. Use BCG high market growth of at least 10% and high relative share of at least 1. Relative share is unit share divided by largest other competitor share in the same market/period. Supplied units: A growth 15%, shares 30/20; B 3%, 40/20; C 12%, 10/25; D 2%, 5/20. A separate research alliance would retain independent partners. Analyse direction, product-market/integration choices, portfolio roles, turnaround/divestment and alliance risks. (10 marks)

Market growth percent; unit/rival shares use same defined market and period. Cutoffs stipulated in question.

Unit	Growth%	Unit share%	Largest other share%
A	15	30	20
B	3	40	20
C	12	10	25
D	2	5	20

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Marks	Credit	Working / case application
2	Direction	Stability for mature efficiency, market development for existing/new region and backward integration for input supplier form a combination. Evaluate actual product/market boundaries and linkages, not use SM 3 p 32 wrong growth labels.
2	Portfolio	Ratios 1.5/2/.4/.25 with supplied growth classify star/cow/question mark/dog. Resource roles need verified cash/capability; no automatic star funding,dog liquidation or question-mark share growth.
2	Recovery	Diagnose the weak unit's causes/core fit/finance. Turnaround can be tested or divestment assessed when mismatch/unviability supports it; no prescribed legal closure sequence or guaranteed recovery.
2	Alliance	Independent research partners can pool skills/risks but share benefits/control/secrets. Set contribution, protection, exit and monitoring; future competition/dependence remain.
2	Decision limits	BCG/Ansoff/GE/ADL classify and guide, not choose transactions mechanically. Acquisition/sale/restructuring/spend need actual terms/approval and competitive/current-rule checks; source friendly/hostile/red-zone-loss generalities remain held.

Official concept source, PDF page 24