CS Professional · Strategic Management and Corporate Finance · Managing the Multi-Business Firm and Analyzing Strategic Edge
Sagar Foods Ltd has a product line with annual sales of ₹90 crore. The largest rival's sales in the same segment are ₹60 crore, and the segment is growing at 4% a year. Taking 1.0 as the relative share cut-off and 10% as the growth cut-off, how should the product line be classified?
The product line is a Cash Cow. Its relative market share is 90/60 = 1.5, above the 1.0 cut-off, while market growth of 4% is below the 10% cut-off. High share in a low-growth market generates surplus cash with little reinvestment need.
- AStar
- BCash CowCorrect
- CQuestion Mark
- DDog
Explanation
Relative share = 90/60 = 1.5, which is above 1.0, so share is high. Segment growth of 4% is below 10%, so growth is low. High share with low growth is a Cash Cow. Calling it a Star would wrongly ignore the low growth.
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