CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Vihaan Pharma has a drug with high market share in a market growing at about 3% a year, generating large cash surpluses. Its new drug has low share in a fast-growing market and needs heavy investment. A third product has low share in a low-growth market. Using the BCG matrix, which is the most appropriate sequence of classification and typical strategic response for these three products respectively?
The first product is a cash cow to be milked, the second a question mark to be built or selectively funded, and the third a dog to be divested or harvested. These follow from market share and market growth positions in the BCG matrix.
- ACash cow: milk it; Question mark: build or selectively invest; Dog: divest or harvestCorrect
- BStar: invest heavily; Cash cow: divest; Dog: build share
- CCash cow: milk it; Question mark: divest immediately; Dog: build share
- DStar: hold; Question mark: milk it; Dog: invest heavily
Explanation
High share in a low-growth market is a cash cow, to be milked for cash. Low share in a high-growth market is a question mark, requiring a decision to build or selectively invest. Low share in a low-growth market is a dog, usually divested or harvested. Other options mismatch products with responses, for example calling the first product a star despite slow growth.
Did you get it right without looking?
One question tells you little. A timed set on Strategic Choices shows your real accuracy, how long you take and where you lose marks.
More Strategic Choices questions
- Mehra Pharma, a Hyderabad firm, plans to grow in the generic medicines market. Its management is weighing a joint venture with a Japanese fi…
- Meghna Retail, an Indian chain facing falling sales, loss-making stores and rising costs, appoints a new CEO who closes unprofitable outlets…
- Ruchi Textiles, an Indian firm, buys a small yarn-spinning unit that supplies its own weaving looms, so that it now controls its raw materia…
- A Mumbai bank and an Indian insurance company enter an agreement in which the insurer's products are sold through the bank's branches. Each …
- A Surat textile firm acquires a cotton-yarn spinning mill that currently supplies its weaving units, so that it controls its own raw materia…
- Sundaram Textiles, a Coimbatore-based yarn maker, buys a spinning mill in Tamil Nadu that supplies the cotton yarn it currently purchases fr…