Because of this, dogs can turn out to be cash traps, tying up company funds for long periods of time. For this reason, they are prime candidates for divestiture. Cash cows, seen in the lower left quadrant, are typically leading products in markets that are mature. These products should be taken advantage of for as long as possible.
Overview[ edit ] To use the chart, analysts plot a scatter graph to rank the business units or products on the basis of their relative market shares and growth rates. Cash cows is where Growth share matrix company has high market share in a slow-growing industry.
These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, yet corporations value owning Growth share matrix due to their cash-generating qualities. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.
Dogs, more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share.
Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed.
Dogs, it is thought, should be sold off. Question marks also known as problem children or Wild cats are businesses operating with a low market share in a high-growth market. They are a starting point for most businesses.
Question marks have a potential to gain market share and become stars, and eventually cash cows when market growth slows. If question marks do not succeed in becoming a market leader, then after perhaps years of cash consumption, they will degenerate into dogs when market growth declines.
Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. Stars are units with a high market share in a fast-growing industry.
They are graduated question marks with a market- or niche-leading trajectory, for example: The hope is that stars become next cash cows. Stars require high funding to fight competitors and maintain their growth rate.
When industry growth slows, if they remain a niche leader or are amongst the market leaders, stars become cash cows; otherwise, they become dogs due to low relative market share. As a particular industry matures and its growth slows, all business units become either cash cows or dogs.
The natural cycle for most business units is that they start as question marks, then turn into stars. Eventually, the market stops growing; thus, the business unit becomes a cash cow.
At the end of the cycle, the cash cow turns into a dog. As BCG stated in Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities.
The balanced portfolio has: Practical use[ edit ] "To be successful, a company should have a portfolio of products with different growth rates and different market shares. The portfolio composition is a function of the balance between cash flows. High growth products require cash inputs to grow.
Low growth products should generate excess cash. Both kinds are needed simultaneously.The BCG growth share matrix is a planning tool that uses graphical representations of a company’s products and services to help the company decide what it .
Strategic Management > BCG Matrix. The BCG Growth-Share Matrix. The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 's.
The matrix helped companies decide which markets and business units to invest in on the basis of two factors—company competitiveness and market attractiveness—with the underlying drivers for these factors being relative market share and growth rate, respectively.
BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth (vertical axis) axis.
What is a Growth-Share Matrix? A growth-share matrix, also known as a Boston or BCG growth matrix, creates a visual assessment of products or investments in terms of relative market share and market growth rate.
Each investment or product is plotted in one of four positions on the matrix. BCG Growth-Share Matrix. Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units.
In the early 's the Boston Consulting Group developed a model for managing a portfolio of .