Strategic Management Chapter 6

QUESTION 1
In a BCG Matrix, all divisions are called question marks, stars, cash cows or dogs. Define each of these terms. Question Marks division is Quadrant I have a low relative market share position, yet they compete in a high-growth industry. Generally these firms’ cash needs are high and their cash generation is low. These businesses are called question marks because the organization must decide whether to strengthen them by pursuing an intensive strategy (market penetration, market development, or product development). Stars division is Quadrant II businesses (star) represent the organization’s best long-run opportunities for growth and profitability. Division with high relative market share and a high industry growth rate should receive substantial investment to maintain or strengthen their dominant positions. Forward, backward and horizontal integration: market penetration; market development; and product development are appropriate strategies for these division to consider. Cash Cows division is Quadrant III have a high relative market share position but compete in a low-growth industry. Called cash cow because they generate cash in excess of their needs they are often milked. Many of today’s cash cow were yesterday’s stars. Cash cow division should be manage to maintain their strong position for as long as possible. Product development or diversification maybe attractive strategies for strong cash cows. However as a cash cows division becomes weak, retrenchment or divestiture can become more appropriate. Dogs division is Quadrant IV have a low relative market share position and compete in a slow- or no-market-growth industry; there are dogs in a firm portfolio. Because of their weak internal and external position, these business are often liquidated, divested, or trimmed down through retrenchment. When division first becomes dogs, retrenchment can be the best strategy to pursue because many dogs have bounced back, after strenuous asset and cash