CS Professional · Strategic Management and Corporate Finance · Competitive Positioning
A listed Indian firm has two businesses. Business A: sales Rs 40 crore, largest rival's sales Rs 80 crore. Business B: sales Rs 90 crore, largest rival's sales Rs 60 crore. Market growth is 4% for A and 15% for B. Using a BCG matrix with a relative market share cut-off of 1.0 and a growth cut-off of 10%, how should A and B be classified respectively?
A is a Dog and B is a Star. A has relative share 0.5 in a market growing 4%, so low share and low growth. B has relative share 1.5 in a market growing 15%, so high share and high growth.
- ADog and StarCorrect
- BQuestion mark and Cash cow
- CDog and Cash cow
- DCash cow and Star
Explanation
Relative share of A = 40/80 = 0.5 (below 1) with growth 4% (below 10%), so it is a Dog. Relative share of B = 90/60 = 1.5 (above 1) with growth 15% (above 10%), so it is a Star. Calling B a Cash cow would ignore its high growth.
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