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CS Professional · Strategic Management and Corporate Finance · Strategic Analysis and Planning

A diversified Indian group has one business with high market share in a low-growth industry, generating more cash than it needs. In the BCG growth-share matrix, how is this business classified and what is the usual strategic prescription?

The business is a cash cow, with high market share in a low-growth industry. The usual prescription is to maintain or harvest it and redeploy the surplus cash to fund stars or promising question marks, rather than investing heavily in it.

  1. ACash cow; harvest or maintain and use cash to fund other businessesCorrect
  2. BStar; invest heavily to hold share
  3. CQuestion mark; decide whether to build or divest
  4. DDog; liquidate immediately

Explanation

High relative market share with low market growth defines a cash cow. It generates surplus cash, so the usual prescription is to maintain or harvest and redeploy cash to stars or promising question marks. Stars have high growth, question marks have low share in high growth, and dogs have low share in low growth.

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