The first quadrant is the “Dogs,” which concentrates businesses with low relative market share in slow-growth or stagnant markets. Such products typically generate little profit and are unpromising for the company (Pruschkowski, 2018). Such products were iPods, which began to rapidly lose relevance after the emergence of the possibility of listening to music on phones (“Business policy and strategic management,” 2019). The company’s management realized this in time and applied the following measures: reducing all investments and closing the product line (“Business policy and strategic management,” 2019). It is typical for “Dogs” to leave the market or decrease their activity, so Apple made a correct choice.
The second quadrant is considered the “Stars.” According to the matrix, there are areas of the company’s business that are leaders in their rapidly growing industry (Pruschkowski, 2018). The company should support and strengthen this type of product, which means not to reduce, but possibly to increase investments. In the example of Apple, such a product is the iPhones line of smartphones, which are the flagship products, bringing the company the most funds (“Business policy and strategic management,” 2019). The firm defines the development of phones as its core activity, concentrating the maximum amount of investment on it (“Business policy and strategic management,” 2019). The “Stars” are characterized by maintaining their leadership, which Apple tries to retain.
The third quadrant is the “Question Marks.” Here are businesses that are in fast-growing industries or segments, but have low market share or, in other words, weak market positions (Pruschkowski, 2018). For Apple, such goods have been styluses and headphones. This can be explained by the fact that most of the company’s resources are devoted to iPhones (“Business policy and strategic management,” 2019). In the field of e-watches, for example, the competition is high and technologies are narrowly focused, so Apple at the moment is engaged in investment and selective development, which is typical of “Question Marks.”
The last quadrant is the “Cash Cows.” They represent lines of business with high relative market share in slow-growth or even stagnant markets (Pruschkowski, 2018). The company’s goods and services represented in this quadrant of the BCG matrix are the main generators of profits and cash flow. These products do not require high investments, only to maintain the current level of sales. The company can use the cash flow from these products and services to develop its more promising “Stars” or “Question Marks” businesses. Apple’s example of such products is the iPad, since the tablet market is stagnating, but Apple’s products remain a source of income (“Business policy and strategic management,” 2019). It is typical for “Cash Cows” to maximize profits.
References
Business policy and strategic management (2019). EDTECH.
Pruschkowski, M. (2018). The BCG matrix and its support of management decision making. GRIN Verlag.