The Boston Consulting Group identified four major strategic thrusts in terms of market share.
Once the products have been plotted, the planner then has to decide on a strategy for that product. There are 4 major strategies that can be followed.
The product or SBU’s market share needs to be increased to strengthen its position. Short-term earnings and profits are deliberately forfeited because it is hoped that the long-term gains will be higher than this.
This strategy is suited to Question Marks.
The objective is to maintain the current share position and this strategy is often used for Cash Cows so that they continue to generate large amounts of cash.
Here management tries to increase short-term cash flows as far as possible (e.g. price increase, cutting costs) even at the expense of the products or SBU’s longer-term future.
It is a strategy suited to weak Cash Cows or Cash Cows that are in a market with a limited future.
Harvesting is also used for Question Marks where there is no possibility of turning them into Stars, and for Dogs.
The objective of this strategy is to rid the organisation of the products or SBUs that are a drain on profits and to utilize these resources elsewhere in the business where they will be of greater benefit. This strategy is typically used for Question Marks that will not become Stars and for Dogs.