One Insight from One Book

Hey friends,

I want to share one insight from a recent book I have been reading.
The book is “The Decision Book: 50 Models for Strategic Thinking “.

In the 70s of the 20th century, Boston Consulting Group developed a method called Growth Share Matrix.

The Cash Cows - A cash cow is one of the four categories (quadrants) in the growth-share BCG matrix representing a product, product line, or company with a significant market share within a mature industry.

Stars - Products in high-growth markets that make up a sizable portion of that market are considered stars and should be invested more. In the upper left quadrant are stars, which generate high income but consume large amounts of company cash. If a star can remain a market leader, it eventually becomes a cash cow when the market’s overall growth rate declines.2

Question Marks - Questionable opportunities exist in high-growth rate markets where the company does not maintain a significant market share. Question marks are in the upper right portion of the grid. They typically grow fast but consume large amounts of company resources. Products in this quadrant should be analyzed frequently and closely to see if they are worth maintaining.

Dogs (or Pets) - If a company’s product has a low market share and is at a low growth rate, it is considered a dog and should be sold, liquidated, or repositioned. Dogs in the lower right quadrant of the grid don’t generate much cash for the company since they have a low market share and little to no growth. Because of this, dogs can become cash traps, tying up company funds for long periods. For this reason, they are prime candidates for divestiture.

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Thanks for reading!
Cheers,
Nadav