Cash cow model business plan

bcg matrix example companies

When examining market growth, you need to objectively compare yourself to your largest competitor and think in terms of growth over the next three years. They consume a lot of cash but bring little in return. These are the cows, the dogs, the stars and the unknowns.

Growth-share matrix is a business tool, which uses relative market share and industry growth rate factors to evaluate the potential of business brand portfolio and suggest further investment strategies. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share".

Companies are advised to invest in cash cows to maintain the current level of productivity, or to "milk" the gains passively.

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A business unit may dominate its small niche, but have very low market share in the overall industry. The matrix helps add input to the decision making process but does not take into account all possible factors that a company may face.

Strategic choices: Vertical integration, horizontal integration, market penetration, market development, product development Question marks. The BCG growth-share matrix displays the various business units on a graph of the market growth rate vs.

Question marks must therefore be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

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Cash Cow Definition