Products do mostly not generate large profit and may usually just break even.Low relative market share in a slowly growing or declining market.They may generate enough cash to maintain themselves, but do not promise to be large sources of cash flow. The company should try to “milk” the cash cows as long as possible.ĭogs are low-growth, low-share businesses and products.No further investment should be undertaken due to limited or non-existent growth potential.High market share in a slowly growing or mature market.Cash cows have the following characteristics: As we have learned, question marks and stars require heavy investment, which usually comes from the profitable cash cows. As a result, they produce cash that the company uses to pay its bills and to support other SBUs that need investment.

These established and successful SBUs need less investment to maintain their market share.

To turn a star into a future cash cow, heavy investment is needed to fight competition and expand market share.Ĭash cows are low-growth, high-share businesses or products.

High market share in a promising market.

Stars have the following characteristics: Eventually, their growth will slow down, and they will turn into cash cows. They often need heavy investment to finance their rapid growth. Stars are high-growth, high-share businesses or products.

Careful analysis is needed to determine whether to invest or not.

If necessary market share is not reached, question marks are likely to turn into dogs as soon as the market gets more mature.

Potential of becoming stars if the market share can be increased.

Low relative market share in a relatively young but promising market (growing).

The company needs to think hard about question marks – which ones should be built into stars, and which ones should be phased out? Question marks have the following characteristics: They require cash to hold their share, let alone increase it. Question marks are low-share business units in high-growth markets. To arrive at these decisions, we need to understand the four types of SBU that are distinguished by the Boston growth-share matrix. So how does the BCG matrix work and help to derive strategic decisions? Now that we have plotted the different products, divisions or SBUs on the BCG matrix, we need to know what to do next.

The relative market share is computed by dividing the company’s market share by the market share of the strongest competitor in that market: Relative market share = Company’s market share ÷ largest competitor’s market share. The market growth rate can easily be researched: usually, you will find plenty of data for almost every industry and market online. If you want or have to conduct a portfolio analysis using the BCG matrix, you need to know where to get these two numbers for each SBU. By dividing the BCG matrix into four fields, four types of SBU can be distinguished. On the horizontal axis, relative market share serves as a measure of the company’s strength in the market. On the vertical axis, the market growth rate provides a measure of the market’s attractiveness. The two axes have been introduced before. How does the BCG matrix work? To understand this, you first need to understand what the BCG matrix actually shows. How does the BCG matrix work? The dimensions/axes of the BCG Matrix

Bcg Matrix Of Microsoft Company Info