Photo AI
Describe the costs and benefits to an organisation of having a varied product portfolio. - Scottish Highers Business Management - Question (b) - 2019
Question (b)
Describe the costs and benefits to an organisation of having a varied product portfolio.
Worked Solution & Example Answer:Describe the costs and benefits to an organisation of having a varied product portfolio. - Scottish Highers Business Management - Question (b) - 2019
Step 1
Describe one benefit of having a varied product portfolio.
Answer
One significant benefit of having a varied product portfolio is that it helps to reduce the risk of failure. By offering multiple products, an organization can mitigate the impact of a downturn in demand for a single product. If one product does not perform well, other products in the portfolio may still thrive, maintaining overall company revenue.
Step 2
Describe a second benefit of having a varied product portfolio.
Answer
Another benefit is that it allows the organization to appeal to a wider variety of market segments. A diverse product portfolio can attract different customer groups, increasing market share and potential profits. This is particularly useful in a competitive market where customer preferences may vary significantly.
Step 3
Describe one cost associated with having a varied product portfolio.
Answer
A cost associated with maintaining a varied product portfolio is the higher expense in terms of advertising and promotion. Each product may require a tailored marketing strategy, leading to increased marketing costs and resource allocation.
Step 4
Describe a second cost associated with having a varied product portfolio.
Answer
Another cost can involve the training of staff for each product. With a diverse product line, employees need comprehensive training to understand the features and benefits of each product, which can be time-consuming and expensive.