Business Plan Tips : Business Growth Share Matrix

The growth share matrix is a business tool
that a lot of people are familiar with. Certainly the idea of cash cows, stars, dogs. We’ve
heard those. In the four basic quadrants of the growth share matrix are those that have
high share, or dominant, positions in their market; or those that have a low share position,
meaning competitors have an advantage; or those that are in high growth markets, typically
younger, attractive markets that are growing rapidly; or low growth markets. The key here
in looking at your portfolio of products or strategic business units is to identify do
you have a balance, how do we balance them. The idea is that cash cows should be throwing
off cash that helps you develop your future stars. Typically stars aren’t money makers,
because they are just developing and they’re paying for very rapid growth. Problem children
are those that have potential. They’re in high growth markets. They’re going to take
investments that are substantially higher than others to grow them. If you have too
many problem children, all your resources will be used up on things that won’t turn
out to be successful. And finally, your dogs. There’s nothing wrong with dogs, but the idea
of investing in dogs in hoping that they’ll be future major products is not likely.

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