Cash cows (high share, low growth)

Cash cows is when the company has high share and low growth. Cash cows are the most
profitable brands and should be “milked” to provide as much cash as possible to support stars.
The cash gained from “cows” should be invested into stars to support their further growth. Cash
cows are usually large corporations or SBUs that are capable of innovating new products or
processes, which may become new stars. If there would be no support for cash cows, they
would not be capable of such innovations. However, there is a rule which is to ‘milk’ these
products as much as possible without killing the cow. Thus, the strategic choices that the
company can use to overcome the challenges are product development, diversification,
divestiture, retrenchment.

Stars (high share and high growth)

Stars means the company has high share and high growth. Stars operate in high growth
industries and maintain high market share. Stars are both cash generators and cash users. Can
be the market leader though require ongoing investment to sustain. They generate more ROI
than other product categories. The main problem for product portfolio managers it to judge
whether the market is going to continue to grow or whether it will go down as they are the
primary units in which the company should invest its money, because stars are expected to
become cash cows and generate positive cash flows. However, in rapidly changing industries,
where new innovative products can soon be outcompeted by new technological advancements,
so a star instead of becoming a cash cow, becomes a dog. Thus, the strategic choice that
company can use are vertical integration, horizontal integration, market penetration, market
development, product development.