Page 47 - Introduction to strategic management

10- BCG Matrix

Resources are allocated to the business units according to their situation

on the grid. Each of these cells represents a particular type of business.
The four cells of this matrix have been called as:

Question Marks:

Question marks represent business units
having low relative market share and
located in a high growth industry. They
require huge amount of cash to maintain or
gain market share. They require attention to
determine if the venture can be viable.
There is no specific strategy which can be
adopted. If the firm thinks it has a

dominant market share; then it can adopt
expansion strategy, else retrenchment
strategy can be adopted. Most businesses
start as question marks as the company
tries to enter a high growth market in which
there is already a market-share. If ignored,
then question marks may become dogs,
Dogs: while if a huge investment is made; then

Dogs represent businesses they have potential of becoming stars.
having weak market shares in

low-growth markets. They neither
generate cash nor require huge
amount of cash. Due to low These business firms have weak market
market share, these business share because of high costs, poor quality,
units face cost disadvantages. ineffective marketing etc. Unless a dog has
Generally retrenchment some other strategic aim, it should be
strategies are adopted because liquidated if there are fewer prospects for it
these firms can gain market to gain market share. Number of dogs
share only at the expense of should be avoided and should be minimized

competitor’s/rival firms. in an organization.

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