CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Rohini Pharma has a product with a very low relative market share in a market that is growing slowly, producing little cash and with poor prospects. Using the BCG matrix, the usual strategic recommendation is to:
A product with low relative market share in a low-growth market is a Dog in the BCG matrix, and the usual recommendation is to harvest or divest it. Heavy investment suits question marks, while milking for cash fits cash cows, so those options are wrong.
- AHarvest or divest the productCorrect
- BInvest heavily to build share
- CHold position and milk cash to fund others
- DConvert it into a star through aggressive promotion
Explanation
Low share with low growth is a Dog in the BCG matrix. Dogs generate little cash and usually are divested or harvested. Holding and milking is the Cash Cow approach, and heavy investment suits Question Marks or Stars.
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