Introduction Portfolio planning model developed by Bruce Handerson in the early 1970’s Helps to evaluate the industry growth and the relative position of a firm in the industry. An increase in market share results in generation of cash. Growing market requires investment in assets to increase capacity. Matrix classifies the business of a firm in to four distinct categories. The two parameters are market growth and market share.
The four categories are Stars Cash cows Question marks Dogs
Stars(=High growth , high market share) Net users of resources Generate large amounts of cash Consumes large amounts of cash Can become the market leader if it maintains its large market share Become a cash cow when the market growth rate declines
Cash cows (=low growth, high market share) Net generator of resources Brings higher profits Does not need heavy investment Provides cash to turn question marks in to stars
Question marks (=high growth ,low market share) Net users of resources Future is uncertain High market growth and consumes large amount of cash Low market share Has the potential to gain market share and become star Becomes cash cow if market growth decline
Dogs (=low growth, low market share) Low market share Low growth rate They are the cash traps Neither generate nor consumes large amount of cash