Company TTT produces a range of products, including products T1 and T5.

CIMA E3 Question Answer

Product T1: Profitability has declined in recent years, although small profits continue to be made as the market contracts due to changing customer pReferences. Overall market share is low and continues to reduce. However, in addition to external sales T1 is also used as a component of product T5.

Product T5: A market leader within a low growth market, sources components both externally and from TTT's other subsidiaries. T5 benefits from significant economies of scale and TTT has recently considered modernizing its T5 production line but following a cost benefit analysis, decided not to proceed.

Which of the following is an appropriate strategy for TTT to adopt?

Divest both product T1 and product T5.

Harvest product T1 and Divest product T5.

Harvest both product T1 and product T5.

Divest product T1 and Harvest product T5.