Presented below is a sample response to a question #B for the company American Entertainment, Inc. This is for guidance only. As stressed in class, each company and their situation is different and the answers to the final question will vary considerably.

B. What does this theory recommend for this company? Explain.

The company’s industry is in the maturity stage of the life cycle and the company has an average to strong competitive position. Hofer recommends profit strategies that "maximize a business’s utilization of its existing resources and skills. Investments under such strategies is usually at maintenance levels, so that the cash throw-off from such businesses is usually both positive and high" (Hofer & Schendel, 1978, p. 103).

Kulzick recommends David’s generic strategies of product development or market penetration. Possibly in some circumstances, market development (Kulzick, 1995).

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