1. Stars
The term Stars has been used to describe businesses that are considered “darlings” because of the high revenues or sales that they bring. Businesses in this category are often considered beautiful like a Star. A star is a market leader in a high growth market (i.e. has relatively high market share and a high market growth rate) although it does not necessarily provide a lot of cash for the organization. Stars do not provide a lot of cash for the organization because the company must spend a great deal of money to keep up with the high market rate of growth, while at the same time fighting off attacks from competitors.
2. Cash Cow
These are businesses in the market whose annual growth rate is slow but still have the largest
market share. This is because cash cows produce a lot of cash for the organization.
The organization doesn’t need to finance a lot of expansion for cash cow businesses, because the market growth rate is slow. In addition to this, the business is a market leader, enjoying
economics of scale and high profit margins. Cash cows are the best. The organization normally
uses its cash cow businesses to support other businesses, to pay bills, or to try to rejuvenate a Dog or to convert a Question mark into a star.
3. Dogs
The term Dog has been used to describe new businesses that have teething problems and no one
knows if it will survive or die. This is used to describe businesses that have a weak market share in low growth markets. They generate profits or even losses, although they can sometimes
generate some cash. Such businesses frequently consume more management time than they are
worth, and may deserve to be phased out. However, an organization may have good reasons to
hold onto Dogs, including:
i)to serve a loyal customer, or
ii) To have a new chance at market leadership or some unforeseen turnaround in market growth rate.
4. Question marks
The term Question marks has been used to describe existing businesses that have budding
problems and no one knows if it will survive or die. This is used to describe businesses that have a weak market share in high growth markets. The management depending on the question mark
viability puts more money to turn them to star or let them become dogs.
Titany answered the question on
October 19, 2021 at 12:58