BCG Matrix Flashcards
What is the Question Mark ?
Question marks (sometimes called “problem children” or “wildcats”) are new products with the potential for success, but needing a lot of cash for development. If such a product is to gain enough market share to become a market leader and thus a star, money must be taken from more mature products and spent on the question mark.
This is a “fish or cut bait” decision in which management must decide if the business is worth the investment needed.
What is the Star?
Stars are market leaders that are typically at or nearing the peak of their perceived product life cycle and are able to generate enough cash to maintain their high share of the market and usually contribute to the company’s profits.
What is the Cash Cows?
Cash cows typically bring in far more money than is needed to maintain their market share. In this maturing or even declining stage of their life cycle, these products are “milked” for cash that will be invested in new question marks. Expenses such as
advertising and R&D are reduced.
What is the Dog?
Dogs have low market share and do not have the potential (usually because they are in an unattractive industry without a significant market position) to bring in much cash. According to the BCG Growth-Share Matrix, dogs should be either sold off or managed carefully for the small amount of cash they can generate.
