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Nestle’ Egypt
Marketing Management
Quiz # 4
Nestle’ Egypt runs more than one business in its portfolio. Two of these businesses are the dairy product
business, which is mainly local production to satisfy the local taste, and the other is the pet food business.
Nestle’ imports its pet food from Belgium where regional production and distribution takes place to
Europe and the MENA region.
Strategic planners at Nestle’ believe that under the current economic situation, upper and upper middle
market segments have become more than ever cost conscious and they have started to cut unnecessary
cost, find alternatives, substitutes, and allocate resources to more vital requirements such as schooling. In
fact, many importers have reverted to local production to take advantage of the economic situation in the
country.
In an effort to manage this portfolio, Nestle's management decided to use the General Electric portfolio
modeling technique. The following is the results that Nestle committee has reached for their dairy and
their pet food business.
Dairy products
Dry pet food
weight
weight
rating
Market size
0.5
0.2
1
Market share
0.3
0.3
2
Competitive intensity
0.25
0.4
1
Product quality
0.5
0.4
3
Market growth rate
0.25
0.4
2
Share growth rate
0.2
0.3
1
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Answers
First thing you need to do before answering the questions is to calculate the market attractiveness and
business strenght of both businesses. The market attractiveness depends on the external factors and the
business strength depends on internal factors.
Dairy products
rating
Value
Market size
4
2
Competitive intensity
2
0.5
Market growth rate
4
1
Market attractiveness
3.5
Market share
4
1.2
Product quality
4
2
Share growth rate
5
1
Business strength
4.2
Dry pet food
weight
rating
Market size
0.2
1
0.2
Competitive intensity
0.4
1
0.4
Market growth rate
0.4
2
0.8
Market attractiveness
1.4
Product quality
0.4
3
1.2
Share growth rate
0.3
1
0.3
Market share
0.3
2
0.6
Business strength
2.1
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1.
Which of the following does not apply to the GE model?
a.
It helps to prioritize the limited resources in order to achieve the best returns.
b.
It helps managers become more aware of how their products or business units perform.
c.
It does not require a consultant or a highly experienced person to determine industry’s
attractiveness and business unit strength as accurately as possible.
d.
It identifies the strategic steps the company needs to make to improve the performance of its
business portfolio.
e.
Only (a) and (b)
f.
Only (c) and (d)
Explanation
: The GE requires a consultant or a highly experienced strategist to determine industry’s
attractiveness and business unit strength as accurately as possible and cannot be carried our by a
someone who does not have the experience of macro and micro analysis due to the complexity and
interdependence of external and internal factors. On the other hand, the GE specifies factors of
weakness or unattractiveness however it does not show what should be done to address these factors.
What should be done is left up to the company to decide based it its situation and capability.
2.
Which of the following applies to the dairy business?
a.
The company should invest into the business units at it promises the highest returns in the future.
b.
This business will require a lot of cash because it operates in a growing industry and will have to
maintain or grow its market share.
c.
The investments should be provided for R&D, advertising, acquisitions and to increase the
production capacity to meet future demand
d.
All of the above
e.
None of the above
Explanation
: by calculating the market attractiveness and the business strength, the dairy business is
found to be a strong business in an attractive market. Hence, all three answers are correct; the
business promises high returns in the future because of the market attractiveness, the business
operates in a growing industry because the growth rating is 4 out of 5, and investment will be
required to increase produciton capacity since demand is growing rapidly.
3.
Which of the following does not apply to the pet food business?
a.
The business operates in an unattractive industry.
b.
It is essential to provide as much resources as possible for this so there would be no constraints
for it to grow.
c.
The business does not have a sustainable competitive advantages or is incapable of achieving it.
d.
The business is performing relatively poorly
e.
The company should not invest heavily into the business units at it does not promise the highest
returns in the future.
f.
This business will not require a lot of cash because it does not operate in a growing industry.
Explanation
: As seen from the above calculations, the pet food business is a weak business in a
non-attractive market. All the above answers except (b) apply to a weak business in a non-attractive
market.
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4.
Nestle's dairy business is a start up business
a.
True
b.
False
Explanation
: in the above calculations, the market share is given higher weight than the share
growth, which means that the market share of the dairy business is more important to Nestle’ then
the share growth. This is the case with established companies as opposed to starting companies that
care more about share growth then the market share. In addition, since the market share has a rating
of 4 out of 5 it means that the dairy business has a high market share, which is again a characteristic
of established businesses.
5.
The reason(s) for your answer in the previous question could be:
a.
Nestle’s dairy business has a high market share.
b.
The market share is more relatively important to Nestle’ than the share growth rate.
c.
Nestle’ has an excellent product quality.
d.
Only (a) and (b)
e.
Only (a) and (c)
Explanation
: product quality is irrelevant of whether the business is etablished or starting. An
established business may have low quality products and a strating business may have an excellent
quality product and vice versa.
6.
There are only a few competitors to Nestle in the pet food market
a.
True
b.
False
Explanation
: in the table above, the competitive intensity is given a low rating which means that
there is high competitive intensity since the competitive intensity and the market attractiveness are
indirectly related.
7.
The reason for your answer in the previous question is:
a.
Competitive intensity in the pet food market has low rating.
b.
The market size in the pet food market is quite large.
c.
The market growth rate is high
d.
All of the above
e.
None of the above
Explanation
: the market size is not indicitive of the competitive intensity as there are markets that
are large in size but monopolized. By the same token, the market growth rate is not an indication to
the competitive intensity as the growth rate by be low but the competitive intensity could be high and
vice versa.

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Marketing Management Quiz # 4 Nestle’ Egypt Nestle’ Egypt runs more than one business in its portfolio. Two of these businesses are the dairy product business, which is mainly local production to satisfy the local taste, and the other is the pet food business. Nestle’ imports its pet food from Belgium where regional production and distribution takes place to Europe and the MENA region. Strategic planners at Nestle’ believe that under the current economic situation, upper and upper middle market segments have become more than ever cost conscious and they have started to cut unnecessary cost, find alternatives, substitutes, and allocate resources to more vital requirements such as school ing. In fact, many importers have reverted to local production to take advantage of the economic situation in the country. In an effort to manage this portfolio, Nestle's management decided to use the General Electric portfolio modeling technique. The following is the results that Nestle committee has reached for their dairy and their pet food business. Dairy products Dry pet food weight rating weight rating Market size 0.5 4 0.2 1 Market share 0.3 4 0.3 2 Competitive intensity 0.25 2 0.4 1 Product quality 0.5 4 0.4 3 Market growth rate 0.25 4 0.4 2 Share growth rate 0.2 5 0.3 1 Answers First thing you need to do before answering the questions is to calculate the market attractiveness and business strenght of both businesses. The market attractiveness depends on the external factors and the business strength depends on internal factors. Dairy products weight rating Value Market size 0.5 4 2 Competitive intensity 0.25 2 0.5 Market growth rate 0.25 4 1 Market attractiveness 3.5 Market share 0.3 4 1.2 Product quality 0.5 4 2 Share growth rate 0.2 5 1 Business strength 4.2 Dry pet food weight rating Market size 0.2 1 0.2 Competitive intensity 0.4 1 0.4 Market growth rate 0.4 2 0.8 Market attractiveness 1.4 Product quality 0.4 3 1.2 Share growth rate 0.3 1 0.3 Market share 0.3 2 0.6 Business strength 2.1 1. Which of the following does not apply to the GE model? a. It helps to prioritize the limited resources in order to achieve the best returns. b. It helps managers become more aware of how their products or business units perform. c. It does not require a consultant or a highly experienced person to determine industry’s attractiveness and business unit strength as accurately as possible. d. It identifies the strategic steps the company needs to make to improve the performance of its business portfolio. e. Only (a) and (b) f. Only (c) and (d) Explanation: The GE requires a consultant or a highly experienced strategist to determine industry’s attractiveness and business unit strength as accurately as possible and cannot be carried our by a someone who does not have the experience of macro and micro analysis due to the complexity and interdependence of external and internal factors. On the other hand, the GE specifies factors of weakness or unattractiveness however it does not show what should be done to address these factors. What should be done is left up to the company to decide based it its situation and capability. 2. Which of the following applies to the dairy business? a. The company should invest into the business units at it promises the highest returns in the future. b. This business will require a lot of cash because it operates in a growing industry and will have to maintain or grow its market share. c. The investments should be provided for R&D, advertising, acquisitions and to increase the production capacity to meet future demand d. All of the above e. None of the above Explanation: by calculating the market attractiveness and the business strength, the dairy business is found to be a strong business in an attractive market. Hence, all three answers are correct; the business promises high returns in the future because of the market attractiveness, the business operates in a growing industry because the growth rating is 4 out of 5, and investment will be required to increase produciton capacity since demand is growing rapidly. 3. Which of the following does not apply to the pet food business? a. The business operates in an unattractive industry. b. It is essential to provide as much resources as possible for this so there would be no constraints for it to grow. c. The business does not have a sustainable competitive advantages or is incapable of achieving it. d. The business is performing relatively poorly e. The company should not invest heavily into the business units at it does not promise the highest returns in the future. f. This business will not require a lot of cash because it does not operate in a growing industry. Explanation: As seen from the above calculations, the pet food business is a weak business in a non-attractive market. All the above answers except (b) apply to a weak business in a non-attractive market. 4. Nestle's dairy business is a start up business a. True b. False Explanation: in the above calculations, the market share is given higher weight than the share growth, which means that the market share of the dairy business is more important to Nestle’ then the share growth. This is the case with established companies as opposed to starting companies that care more about share growth then the market share. In addition, since the market share has a rating of 4 out of 5 it means that the dairy business has a high market share, which is again a characteristic of established businesses. 5. The reason(s) for your answer in the previous question could be: a. Nestle’s dairy business has a high market share. b. The market share is more relatively important to Nestle’ than the share growth rate. c. Nestle’ has an excellent product quality. d. Only (a) and (b) e. Only (a) and (c) Explanation: product quality is irrelevant of whether the business is etablished or starting. An established business may have low quality products and a strating business may have an excellent quality product and vice versa. 6. There are only a few competitors to Nestle in the pet food market a. True b. False Explanation: in the table above, the competitive intensity is given a low rating which means that there is high competitive intensity since the competitive intensity and the market attractiveness are indirectly related. 7. The reason for your answer in the previous question is: a. Competitive intensity in the pet food market has low rating. b. The market size in the pet food market is quite large. c. The market growth rate is high d. All of the above e. None of the above Explanation: the market size is not indicitive of the competitive intensity as there are markets that are large in size but monopolized. By the same token, the market growth rate is not an indication to the competitive intensity as the growth rate by be low but the competitive intensity could be high and vice versa. Name: Description: ...
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