It is not necessary that the highest bid for the debtor will automatically be selected by the creditors. Thank you for reading CFI’s guide to the BCG Matrix.The Evaluation Matrix in IBC, is a list of parameters that are used for judging and approving of resolution plans. Products in the cash cows quadrant are “milked” and firms invest as little cash as possible while reaping the profits generated from the products. The products already have a significant amount of investments in them and do not require significant further investments to maintain their position.Ĭash flows generated by cash cows are high and are generally used to finance stars and question marks. Products in the cash cows quadrant are thought of as products that are leaders in the marketplace. Products in the cash cows quadrant are in a market that is growing slowly and where the product(s) have a high market share. Stars are a company’s prized possession and are top-of-mind in a firm’s product portfolio. As the market matures and the products remain successful, stars will migrate to become cash cows.
Stars consume a significant amount of cash but also generate large cash flows. Products in the stars quadrant are market-leading products and require significant investment to retain their market position, boost growth, and maintain a competitive advantage. Products in the star quadrant are in a market that is growing quickly and one where the product(s) have a high market share.
Firms typically phase out products in the dogs quadrant (as indicated by B) unless the products are complementary to existing products or are used for a competitive purpose. Products in the dogs quadrant are typically able to sustain themselves and provide cash flows, but the products will never reach the stars quadrant. Products in the dogs quadrant are in a market that is growing slowly and where the product(s) have a low market share. If question marks do not succeed in becoming a market leader, they end up becoming dogs when market growth declines. In the best-case scenario, a firm would ideally want to turn question marks into stars (as indicated by A). Investments in question marks are typically funded by cash flows from the cash cow quadrant. Question marks are the most managerially intensive products and require extensive investment and resources to increase their market share. Products in the question marks quadrant are in a market that is growing quickly but where the product(s) have a low market share. Learn more about strategy in CFI’s Business Strategy Course. The market growth rate varies from industry to industry but usually shows a cut-off point of 10% – growth rates higher than 10% are considered high, while growth rates lower than 10% are considered low. A firm benefits from utilizing economies of scale and gains a cost advantage relative to competitors. The assumption in the matrix is that an increase in relative market share will result in increased cash flow.
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