(Source: Yeldon, Accountancy, October 1999, Pg.106)

• Forms part of the company's strengths and weaknesses or 'position audit' and breaks the business/company products down into 4 groups, based on:

1. RELATIVE MARKET SHARE (measure against strongest competitor, market share an indicator of cash-generating ability)
2. INDUSTRY GROWTH RATE (measure of cash use, expanding market will require investment in capital equipment and marketing

 THE FOUR GROUPS ARE 

1. PROBLEM CHILD/QUESTION MARKS, low market share in rapidly expanding industry
2. STAR, high share of a growing market, will produce cash, but much eaten up by investment to sustain growth
3. CASH COW, should produce cash due to its market status and will require less investment
4. DOG, require little investment, but unlikely to generate much cash itself

• Business needs cash cows, they provide cash to develop business
• Hope that question marks can be promoted into stars (if sufficient cash available)
• As life cycle slows, they will ultimately turn into cash cows
• Balance is needed, cash cows (may make money) but eventually turn into dogs
• There must be question marks in need of development
• If there are many, must decide which to fund to turn them into stars
• Dogs should either be managed effectively to maximise generated cash
• ...or divested to produce cash to grow stars

• The model will not tell you which question marks deserve investment or which dogs to sell or retain
• You need to interact with the world, and so use as a starting block, to other models
• Hence, use Porter's five forces:
• Look for barriers to entry, if you have these a business may be worth building or easier to sell (harder to develop organically)
• Less competitive rivalry = easier to create stars, consider acquiring a question mark from a competitor
• Dogs may be worth saving if they permit a full range of services that competitors cannot provide