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Business Strategy and Accounting Basics

In product portfolio management (PPM), how is a business with a high market growth rate and a high relative market share classified?

  1. AStar
  2. BCash cow
  3. CQuestion mark
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Answer: A. Star

PPM classifies businesses or products into four groups along two axes, market growth rate and relative market share, to decide how to allocate management resources. A star, with both high market growth and high relative market share, has large sales but also needs heavy investment to keep its share in a growing market, so both its cash inflow and outflow are large. Low market growth with high share is a cash cow, high market growth with low share is a question mark (problem child), and low on both is a dog.

  • A. Correct. It is a business with a high share in a growing market, expected to become a cash cow when market growth slows.
  • B. This is a business with low market growth and high relative market share.
  • C. This is a business with high market growth and low relative market share.
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