ACCA Applied Knowledge · Business and Technology · Competitive factors
Zentra Ltd sells a mature product with a high relative market share in a market that is growing very slowly. Under the Boston matrix, which strategy is most appropriate for this product?
Zentra should harvest the product, using its surplus cash to fund other products. High share in a slow-growth market makes it a cash cow, which generates strong cash with little need for investment, so heavy spending or immediate divestment would be inappropriate.
- AHarvest it, using the surplus cash to fund other productsCorrect
- BInvest heavily to build further market share
- CDivest immediately because growth is low
- DReposition it as a question mark
Explanation
High share in a low-growth market is a cash cow, which generates more cash than it needs. The usual strategy is to maintain and harvest it to fund stars and question marks. Heavy investment is unnecessary in a low-growth market, and divesting is the strategy for dogs.
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