In the early 1970s, a new system of organizing the growing acquisitions of corporations was introduced. Called the growth/share matrix, this tool seemed to operate on the most logical of assumptions: corporations should sell off their losing divisions as determined by the divisions' positions on the matrix, and retain and increase those divisions that the matrix considered successful. According to the Harvard Business Review, the Boston Consulting Group (BCG) introduced the matrix in response to corporations that had entered the heyday of acquisition and diversification of the 1960s and early 1970s, and subsequently faltered with the energy crisis of 1973. The matrix worked by ordering each division according to its position within its industry overall. Thus, managers had a tool for understanding the relative success of those businesses whose fields they were unfamiliar with.
Enthusiasm over the matrix and its simplicity and apparent logic obscured one of the problems inherent in the initial situation: the wide range of acquisitions these corporations had purchased. The matrix evaluated the performance of the divisions in terms of their competitiveness within their fields and their cash value, but failed to analyze the relationships among divisions that comprised a corporation's holdings. For instance, a corporation that owned a newspaper chain and a paper mill would be advised to consider more than just the relation of the paper mill's performance to that of other mills. Beyond this, the matrix underestimated the amount of debt a corporation could safely assume. And finally, the matrix was unable to provide information regarding the corporation's ability to manage even those successes identified by the matrix. Simply having a number of separately competitively successful companies does not ensure that companies will be able to support their owners without proper management and understanding. Despite the clarity and effectiveness of the growth/share matrix as a tool for determining divisions' performance, it could not long compensate for the difficulties present in the initial situation it sought to alleviate, that of corporations believing that their particular management styles would function effectively for any type of smaller business they might acquire.
It can be inferred from the passage that the author suggests which of the following concerning some corporations during the energy crisis of 1973?
A)The troubles of these corporations were related to problems of conforming their management styles to their new holdings.
B)Lack of fuel led many companies to have trouble powering their acquisitions.
C)Corporations' reliance on the growth/share matrix led them to mismanage their holdings
D)Over-enthusiastic buying of smaller companies left many corporations unwieldy and difficult to manage
E)Too little diversification forced companies to find a tool to estimate the relative success of companies whose fields they were unfamiliar with.
OA A
Can anyone explain why the correct choice is A. where the line is mention in the passage?? Why not D is the answer?
Enthusiasm over the matrix and its simplicity and apparent logic obscured one of the problems inherent in the initial situation: the wide range of acquisitions these corporations had purchased. The matrix evaluated the performance of the divisions in terms of their competitiveness within their fields and their cash value, but failed to analyze the relationships among divisions that comprised a corporation's holdings. For instance, a corporation that owned a newspaper chain and a paper mill would be advised to consider more than just the relation of the paper mill's performance to that of other mills. Beyond this, the matrix underestimated the amount of debt a corporation could safely assume. And finally, the matrix was unable to provide information regarding the corporation's ability to manage even those successes identified by the matrix. Simply having a number of separately competitively successful companies does not ensure that companies will be able to support their owners without proper management and understanding. Despite the clarity and effectiveness of the growth/share matrix as a tool for determining divisions' performance, it could not long compensate for the difficulties present in the initial situation it sought to alleviate, that of corporations believing that their particular management styles would function effectively for any type of smaller business they might acquire.
It can be inferred from the passage that the author suggests which of the following concerning some corporations during the energy crisis of 1973?
A)The troubles of these corporations were related to problems of conforming their management styles to their new holdings.
B)Lack of fuel led many companies to have trouble powering their acquisitions.
C)Corporations' reliance on the growth/share matrix led them to mismanage their holdings
D)Over-enthusiastic buying of smaller companies left many corporations unwieldy and difficult to manage
E)Too little diversification forced companies to find a tool to estimate the relative success of companies whose fields they were unfamiliar with.
OA A
Can anyone explain why the correct choice is A. where the line is mention in the passage?? Why not D is the answer?
