Test on Arthur D. Little Matrix: Portfolio Analysis

Question 1: The 'Activity costs' variable is exclusively considered when assessing the Sector Maturity axis in the Arthur D. Little Matrix for exam purposes.

A. Ano

B. Ne

Explanation: Activity costs are listed under 'Competitive position', not 'Sector maturity', as a key variable considered within the axes of the Arthur D. Little Matrix.

Question 2: An advantage of the Arthur D. Little Matrix is that the variables used for its axes are always simple to evaluate.

A. Ano

B. Ne

Explanation: The study materials state that a disadvantage of the ADL Matrix is that 'Sometimes, the variables in the axes can be difficult to assess', not that they are always simple to evaluate.

Question 3: According to the ADL Matrix, which of the following strategies are recommended for a Business Unit that holds a 'Strong' competitive position?

A. Consolidating market share and maintaining competitive position in a mature sector.

B. Radical reorientation or abandonment if the sector is in decline.

C. Efforts to increase market share by growing faster than the sector during the growth phase.

D. Maintaining competitive position through a harvesting strategy in a declining sector.

Explanation: For a 'Strong' competitive position, the ADL Matrix recommends 'Consolidating market share (growing with the sector)' and 'Maintaining comp. position' during the Maturity phase (Option 0). During the Growth phase, it advises 'Efforts to increase market share (growing faster than the sector)' and 'Maintaining comp. position' (Option 2). In a Declining sector, the recommendation is 'Maintaining competitive position / harvesting strategy' (Option 3). Option 1, 'Radical reorientation or abandonment', is a strategy for a 'Marginal' competitive position in a declining sector, not 'Strong'.

Question 4: According to the ADL Matrix, which of the following are strategic recommendations for a business unit classified as having a 'Marginal' competitive position?

A. In the introduction stage, efforts to achieve extra market share, and in the growth stage, efforts to increase market share.

B. In the maturity stage, maintaining and defending market share, and in the decline stage, maintaining competitive position.

C. In the introduction stage, improving competitive position, restructuring or abandonment, and in the growth stage, reorientation or abandonment.

D. In the growth stage, consolidating market share, and in the maturity stage, maintaining market share around a favourable niche.

Explanation: According to the study materials for the ADL Matrix, for a 'Marginal' competitive position: in the introduction stage, the recommendation is 'Improving competitive position, restructuring or abandonment (liquidation)'; in the growth stage, it is 'Reorientation or abandonment (liquidation)'; and in the maturity stage, 'Radical reorientation or abandonment (liquidation)'. Option 2 accurately reflects the strategies for the introduction and growth stages for a marginal position. The other options describe strategies for different competitive positions or maturity stages.

Question 5: When diagnosing the corporation's situation to assess the balance of the portfolio, future growth potential is a key aspect considered.

A. Ano

B. Ne

Explanation: Step 3 of the PAT Analysis involves diagnosing the corporation's situation to assess the balance of the portfolio in terms of Future growth potential, Future profitability, and Financial viability of decisions.