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CS Professional · Strategic Management and Corporate Finance · Managing the Multi-Business Firm and Analyzing Strategic Edge

In the BCG growth-share matrix, a business unit of Kaveri Foods has a relative market share of 0.4 and operates in a market growing at 3% a year, while the cut-off for high growth is taken as 10% and for high share as 1.0. How is the unit classified and what is the usual strategic prescription?

The unit is a Dog, because both its relative market share of 0.4 and market growth of 3% fall below the stated cut-offs of 1.0 and 10%. The usual prescription is to harvest or divest, since such units rarely generate attractive returns.

  1. ADog; consider divestment or harvestingCorrect
  2. BCash cow; milk for cash
  3. CQuestion mark; invest selectively or divest
  4. DStar; invest heavily to sustain growth

Explanation

Relative share 0.4 is below 1.0 (low share) and growth 3% is below 10% (low growth), so the unit is a Dog. The usual prescription is harvest or divest. A cash cow would need high relative share, which this unit lacks.

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