XII. Read the following text and summarize it in 100 words. The Boston Consulting Group Approach

Using the Boston Consulting Group (BCG) approach, a company classifies all its SBUs in the growth-share matrix. On the vertical axis, market-growth rate provides a measure of market attractiveness. On the horizontal axis, market share serves as a measure of company strength in the market. By dividing the growth-share matrix in the way indicated, four types of SBUs can be distinguished:

Stars. Stars are high-growth, high-share businesses of products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

Cash cows. Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of cash that the company uses to pay its bills and support other SBUs that need investment.

Question marks. Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out.

Dogs. Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be a large source of cash.

The ten circles in the growth-share matrix represent a company’s ten current SBUs. The company has two stars, two cash cows, three question marks, and three dogs. The areas of each circle are proportional to the SBU’s dollar sales. This company is in fair shape, although not in good shape. It wants to invest in the more promising question marks to make them stars, and to maintain the stars so that they will become cash cows as their markets mature. Fortunately, it has two good-sized cash cows whose income helps finance the company’s question marks, stars, and dogs. The company should take some decisive action concerning its dogs and its question marks. The picture would be worse if the company had no stars, too many dogs, or only one weak cash cow.

market growth rate	High	Star		Question marks ? ? ?
	Low	Cash cow		Dog
			High	Low
relative market share

As time passes, SBUs change their position in the growth-share matrix. Each SBU evolves. Many SBUs start out as question marks and move into the star category if they succeed. They later become cash cows as market growth falls, then finally turn into dogs toward the end of their life cycles. The company needs to add new products and units continuously so that some of them will become stars and eventually cash cows to help finance its other SBUs.