European Distance Learning College Assessment Term Paper

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SBUs C. And D. are the cash cows necessary to fund the growth of SBUs a and B. The dog of the group, SBU E, provides no net cash flow and adds no value to the overall product mix. The European distance learning center's current product mix is relatively well balanced. There are SBUs able to generate cash and SBUs that could become stars with cash infusions from the cash cows. The college's competitive "health" is good, but the college must have a strategy to remain healthy.

To formulate future strategy, dividing the SBUs into business units that fit into clear categories and SBUs that do not fit easily into a category helps the company focus on the SBUs that need work. The ideal cash cow is SBU D. The large amount of excess cash generated by this SBU is very secure. The college has a strong leadership position. The competitor holding the second position has only one-quarter the students of SBU D. The low market growth rate of 4% discourages existing and new competitors from making any investment that would threaten the college's market leadership. The ideal dog is SBU E. The college does not have a leadership position in this market and the market growth rate is low at 4%. No cash will be generated for SBU E. And the college should not invest any more cash in this SBU.

SBU D. And E. have been identified as products not requiring additional cash. The other three SBUs do need additional cash for differing reasons. SBU C. falls into the cash cow category, but the product area still needs some cash injection to move this SBU into a strong cash cow position similar to SBU D. The college does have the largest market share, but the competitors occupying the second and third positions are not far behind.

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SBU C. has nearly three times more competitors than SBU D. And the market growth rate is nearly twice the rate of the SBU D's market. To increase market share the college should use a combination of buying market share, thereby reducing the number of competitors, and growing market share while the market growth rate is at least moderate. Use cash to buy business from some of the numerous competitors. Also use cash to add more courses or more sections of existing courses to grow market share.

SBU a currently fits in the question mark category. The limited number of competitors, the second fewest of the five SBUs, the third highest market share of the nine colleges in the product area, and a double digit (15%) market growth rate make this a good product area to invest excess cash. The best approach to move SBU a into the star category is to use excess cash to grow market share. Add courses, add more sections to existing courses, and increase the frequency of course offerings by adding a winter intersession or a summer session, to grow market share. Buying market share does not have as great a potential as growing market share because the number of competitors is small….....

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