Please read the case study and answer the question based on case study and Answer the question with

approximately Marks given. 1 answer = 1marks

GROWTH STRATEGY IN DISPUTE AT TRAFFIC CLOTHING PLC Traffic Clothing ple produces suits and dresses and sells them to major retailers in several countries. Sales turnover has grown by around 15% each year for the last decade - a slower rate than some competitors. Traffic's low prices have been possible due to the opening of low- cost factories in developing countries. This internal growth strategy was supported by most of the directors. They believed that it had been achieved without excessive external borrowing. There were some real causes for concern, however. Sales revenue was increasing, but profits were unchanged for the last three years. This was due to several factors. First, new competitors were entering the clothing market and driving down prices. Secondly, raw material prices for both natural and manmade inputs were rising. Lastly, the number of mergers between large clothing retailers had increased their bargaining power when dealing with producers like Traffic. Major shareholders in Traffic were not happy with the directors' growth strategy. At the last board meeting, the finance director proposed a policy of rapid external growth. He argued that this could be achieved by aggressive takeovers of either other clothing producers or material suppliers to achieve cost leadership. The marketing director suggested focusing on a smaller. higher-income market segment. This could be reinforced with a merger with a prestige clothing retailer, 'Our own shops will give us real power in the high street as we will be able to offer customers a top quality shopping experience this will allow differentiation in a crowded market. The chief executive suggested that both directors prepare a detailed report on these proposals. 2. Answer the following question: A. Use the case study to explain the difference between internal and external growth. (8 Marks) B. Explain how the business increased sales revenue, yet gained no increase in profits for the last three years. (6 Marks) C. Assess the likely advantages and disadvantages of a cost leadership strategy for this business. (8 Marks) D. Assess the likely advantages and disadvantages of a differentiation or a focused strategy for this business. (8 Marks)