CA Intermediate · Financial Management and Strategic Management · Strategic Choices
A BCG matrix analysis of Kaveri Foods shows a product with low relative market share in a high-growth market that consumes heavy cash. Management believes that with a large investment it can gain share, otherwise it will be dropped. Which classification and generic action fit best?
The product is a question mark: low relative market share in a high-growth market with heavy cash needs. The usual choice is to build selectively with investment to gain share, or divest if that is not viable. Dogs and cash cows sit in low-growth markets.
- ACash cow; harvest
- BDog; divest immediately
- CQuestion mark; build selectively or divestCorrect
- DStar; hold and maintain
Explanation
Low relative share with high market growth is a question mark (problem child). The choices are to invest to build share, which may turn it into a star, or to divest. A dog has low share in low growth, and a cash cow has high share in low growth.
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