Growth-share matrix is a portfolio planning method that evaluates a company’s SBUs (Strategic Business Unit) in terms of its market growth rate and relative market share.The growth-share matrix defines four types of SBUs:
- Stars: Stars are high-growth, high –share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.
- Cash cows: Cash cows are low-growth, high-share business or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay its bills and support other SBUs that need investment.
- Question marks: Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out.
- Dogs: Dogs are low-growth, low-share business and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.