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CA Intermediate · Financial Management and Strategic Management · Strategic Choices

Kaveri Appliances has a product line with a very low relative market share in a market growing at only 3% a year. It generates little cash and has weak prospects. Under the BCG matrix, the usual recommendation for this business unit is:

The usual recommendation is to divest or harvest the unit. Low relative market share in a low-growth market makes it a dog in the BCG matrix, which yields poor returns and limited cash, so heavy investment is not justified.

  1. ABuild it aggressively with heavy investment
  2. BHold it to generate cash for stars
  3. CDivest or harvest itCorrect
  4. DInvest to convert it into a cash cow

Explanation

Low relative share with low market growth is a dog in the BCG matrix. Dogs consume management attention and offer little return, so the usual advice is divestment or harvesting. Heavy investment is advised for question marks with promise, not dogs.

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