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Cash cows require little investment and generate cash

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Cash cows require little investment and generate cash that can be utilized for investment in otherbusiness units. Cash cows provide the cash required to turn question marks into market leaders,to cover the administrative costs of the company, to fund research and development, to servicethe corporate debt, and to pay dividends to shareholders.These SBU’s are the corporation’s keysource of cash, and are specifically the core business. They are the base of an organization. Thesebusinesses usually follow stability strategies. When cash cows lose their appeal and movetowards deterioration, then a retrenchment policy may be pursued. Companies are advised toinvest in cash cows to maintain the current level of productivity, or to "milk" the gains passively.18 |P a g e
Question marks (low market share and high growth rate)Question marks represent business units having low relative market share and located in a highgrowth industry. They require huge amount of cash to maintain or gain market share.In theendQuestion marks are also known as Problem Child.They require attention to determine if theventure can be viable. Question marks are generally new goods and services which have a goodcommercial prospective. There is no specific strategy which can be adopted. If the firm thinks ithas dominant market share, then it can adopt expansion strategy, else retrenchment strategy canbe adopted. Most businesses start as question marks as the company tries to enter a high growthmarket in which there is already a market-share. If ignored, then question marks may becomedogs, while if huge investment is made, than they have potential of becoming stars. Companiesare advised to invest in question marks if the product has potential for growth, or to sell if it doesnot.Dogs (low market share and lowgrowthrate)Dogs represent businesses having weak market shares in low-growth markets. They neithergenerate cash nor require huge amount of cash. Due to low market share, these business unitsface cost disadvantages. Generally retrenchment strategies are adopted because these firms cangain market share only at the expense of competitor’s/rival firms. These business firms haveweak market share because of high costs, poor quality, ineffective marketing, etc. Unless a doghas some other strategic aim, it should be liquidated if there are fewer prospects for it to gainmarket share. Number of dogs should be avoided and minimized in an organization. They arebreak even products. Companies should not invest money in that.BCG MATRIX OF KFCThe need for strategy, in order to expand its existing product in very promising market for KFCis very essential. KFC and McDonalds, and other major fast food chains have dominated theAmerican continent as well as elsewhere. Since the1950’s when the founder of KFC had a dreamof building an empire in the fast food market, the company has undergone lots of changes.Thecompanyhaschanged ownership that has taken over from Pepsi Co. Nowadays, KFC, still

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Term
Summer
Professor
Unknown
Tags
Management, Marketing, Fast food restaurant

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