The term “Cash Cow” encompasses companies with a high in a slow-growing industry.
For such companies, neither nor is an issue.
The one drawback is that because the markets are mature, the overall is low with limited opportunities to reinvest or expand into different markets, i.e. such companies are boring but profitable.
The required reinvestment activity and overall efforts are minimal to sustain the historical levels of generation for such companies.Kolkata Stocks
The “Star” quadrant describes companies with high market share in a high-growth industry.Ahmedabad Investment
By exhibiting strong historical growth (and a pipeline of promising future opportunities) alongside high market share, stars are perceived as the most favorable products for those seeking the highest risk-adjusted returns.
Most often, these companies provide niche products or services, and tend to exhibit a clear competitive advantage, i.e. “moat”.Mumbai Investment
Of course, high growth requires spending, meaning that reinvestments are necessary to maintain strong growth.
Once the growth of the company declines and the market position stabilizes, the stars would ideally then become cash cows.
The “Question Mark” refers to companies with low market share operating in a high-growth market.New Delhi Stock Exchange
Since these sorts of companies are not market leaders, significant spending is necessary to grow and take market share away from incumbents.
The potential upside and downside are unknown, as the outcome of the company depends entirely on being able to obtain market traction and executing properly; hence, the uncertainty.
The final quadrant consists of “Pets” — the least favorable categorization in the matrix — which are companies with low market share in a mature industry with declining growth.
These companies are characterized by low margins with minimal (or potentially even negative) generation.
The most common treatment of such companies (or business units) is to discontinue operations, liquidate, or complete a divestiture, i.e. a sale to a third-party buyer.
BCG Matrix Growth Quadrants (Source: BCG)
Jaipur Wealth Management