Question

Within Kraljic's Portfolio Analysis, products that represent High Risk and Low Value to the company are categorized as: A. Leverage or Preferred B. Superior C. Bottleneck D. Critical or Strategic E. Routine or Arms-Length

Answer 1

Answer:

C. Bottleneck

Explanation:

Kraljic's Portfolio Analysis is used to assess business risk and maximise profits. It reduces cost by estimating security level of an endeavour.

It involves the following step:

- Product purchase classification

- Market analysis

- Strategic positioning

- Action planning

Product classification is the process by which commodities are categorised based on risk level and profitability.

The following are the categories:

- Leverage items have high profit and low supply risk

- Non critical items have low risk and low profit

- Bottleneck items have high risk and low profit

- Strategic items have high profit and high risk

Answer 2

The product that shows high risk and low value should be option c. Bottleneck

Kraljic's Portfolio analysis:

According to the above analysis, the product should be split into 4 parts:

• Strategic items - These items shows high risk and high value in terms of profit for the company.
• Bottleneck items- These items shows high risk and low value in terms of profit for the company.
• Leverage items- These items show low risk and high value in terms of profit  for the company.
• Non-critical items- These items represent low risk and low value in terms of profit for the company

Hence, the correct option is: B. Bottleneck

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