SBUs or products that have lost their position of leadership and are in the low growth markets, are known as
Dog
Understanding Strategic Business Units in Low Growth Markets: The BCG Matrix
In strategic management, companies often analyze their portfolio of Strategic Business Units (SBUs) or products using tools like the Boston Consulting Group (BCG) Matrix. This matrix helps classify SBUs based on two dimensions: market growth rate and relative market share.
The BCG Matrix categorizes SBUs into four types:
| Category | Market Growth Rate | Relative Market Share | Description |
|---|---|---|---|
| Star | High | High | Leaders in high-growth markets. Require significant investment to maintain growth but generate high returns. |
| Problem Child (or Question Mark) | High | Low | Operate in high-growth markets but have low market share. Require investment to increase share or risk becoming Dogs. Uncertain future. |
| Cash Cow | Low | High | Leaders in low-growth markets. Generate significant cash flow with minimal investment needed to maintain share. Used to fund other SBUs. |
| Dog | Low | Low | Operate in low-growth markets and have low market share. May generate just enough cash to break even, or even lose money. Often candidates for divestiture or liquidation. |
Analyzing the Question's Characteristics
The question describes SBUs or products that:
- Are in low growth markets.
- Have lost their position of leadership, implying a low relative market share.
Identifying the Correct BCG Category
Based on the BCG Matrix definitions:
- Low growth market matches the characteristics of Cash Cows and Dogs.
- Lost their position of leadership, meaning a low relative market share, matches the characteristics of Problem Children and Dogs.
Combining both characteristics – low growth market AND low market share – specifically points to the "Dog" category in the BCG Matrix.
These are often businesses or products that are no longer competitive in mature or declining markets. They consume resources without providing significant returns.
Therefore, SBUs or products that have lost their position of leadership and are in low growth markets are known as Dogs.
Revision Table: BCG Matrix Summary
| Category | Market Growth | Market Share | Strategy Implications |
|---|---|---|---|
| Star | High | High | Invest to grow and maintain leadership. Future Cash Cows. |
| Problem Child (Question Mark) | High | Low | Analyze carefully. Invest heavily to gain share (turn into Star) or divest. |
| Cash Cow | Low | High | Milk for cash. Minimal investment. Fund other ventures. |
| Dog | Low | Low | Divest or liquidate. Avoid investment. May break even or lose money. |
Additional Information: Strategies for BCG Categories
Companies typically apply different strategies to the SBUs based on their BCG classification:
- Build: For Problem Children or Stars, the goal is to increase market share. Requires significant investment.
- Hold: For Cash Cows, the goal is to preserve market share and maintain their position to continue generating cash.
- Harvest: For weak Cash Cows or Dogs, the goal is to maximize short-term cash flow, even at the expense of long-term market share. Minimizing investment.
- Divest: For Problem Children or Dogs that are not performing well or don't fit the company's future strategy, the goal is to sell or liquidate the SBU. This frees up resources for more promising ventures.
The BCG Matrix is a helpful tool for portfolio analysis but has limitations, such as being a static view and not considering other factors like market size or synergy between SBUs.
Important Questions from Trends in Marketing
Match the modes of communication in marketing and their communication platforms
(Mode of Communication)
(Communication Platform)
(a)
Advertising
(i)
Blogs
(b)
Sales Promotion
(ii)
Brochures & Booklets
(c)
Word-of-mouth marketing
(iii)
Sales meetings
d)
Personal selling
(iv)
Contests
Choose the correct optionWhen a company distributors its products through a channel structure that includes one or more resellers, it is known as
In e-commerce, one of the key design elements of an effective website - community refers to
1. Its layout and design
2. The way site enables user to user communication
3. Sites ability to tailor itself to different users or to allow users to personalize the site
4. Degree that the site is linked to the other sites
Which one of the following is not true for Mass Marketing?
Tele - Marketing is a part of
