Page 28 - Portfolio Analysis

FIGURE 13

INTERNAL FLOW OF FUNDS

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STARS

Stars are high-growth, high-market-share products. They are often
cash-using because cash is necessary to finance their rapid growth.
Eventually their growth will slow down and they will turn into cash cows

and become major cash generators supporting other products.

Products that are market leaders but growing quickly will have substantial
reported profits but need a lot of cash to finance the rate of growth. The
appropriate strategies are those which will protect the existing share level
by reinvesting earnings, by making price reductions, product
improvements or developing better market coverage.