Detailed Definition
In the context of the Boston Consulting Group (BCG) Growth-Share Matrix, a “Dog” represents a product or business unit that holds a small market share in a low-growth market. These entities tend to generate modest or negative cash returns and often consume more resources than they generate. Companies typically consider divesting or discontinuing these products or units unless they serve a strategic purpose or have potential for turnaround.
Examples
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Traditional DVD Rentals: In the late 2000s, traditional DVD rental services struggled to compete in a market increasingly dominated by streaming services. A retail chain specializing only in DVD rentals would be considered a Dog.
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Analog Cameras: As digital cameras have taken over the photography market, companies continuing to produce analog cameras with dwindling market share and minimal growth prospects would classify these products as Dogs in their portfolio.
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Landline Telephones: With the rise of mobile technology, businesses focusing primarily on landline phones now experience shrinking market shares and fall within low-growth markets, making them Dogs within the BCG Matrix.
Frequently Asked Questions
Q: Why is it called a “Dog”? A: The term “Dog” is used metaphorically to indicate products or business units that don’t contribute significantly to overall profitability, similar to how a household pet doesn’t necessarily contribute financially to the family.
Q: Should companies always divest their Dogs? A: Not necessarily. While many Dogs can be financially draining, they might hold strategic advantages or have potential for turnaround under certain circumstances.
Q: Can a Dog product ever become a Cash Cow? A: It is unlikely for a Dog to become a Cash Cow, as Cash Cows typically exist in low-growth markets but hold a high market share. Turning a Dog into a Cash Cow would generally require significant transformation and market changes.
Related Terms and Definitions
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Boston Matrix: A strategic tool used for portfolio analysis, developed by the Boston Consulting Group, which categorizes business units or products into four quadrants (Stars, Question Marks, Cash Cows, Dogs) based on their market growth rate and relative market share.
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Cash Cows: Products or business units with a high market share in a low-growth market that generate significant and steady cash flow.
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Stars: High market share products in rapidly growing markets. They often require substantial investment to sustain their growth but promise high returns.
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Question Marks: Products or business units with low market shares in high-growth markets. These require close attention and significant investment to determine if they can become Stars or will turn into Dogs.
Online References
Suggested Books for Further Study
- “Competitive Strategy: Techniques for Analyzing Industries and Competitors” by Michael E. Porter - An essential resource for understanding competitive strategy and industry analysis.
- “The Boston Consulting Group on Strategy: Classic Concepts and New Perspectives” by Carl W. Stern and Michael S. Deimler - Provides insight into BCG’s strategic concepts, including the Growth-Share Matrix.
- “Strategic Management: Concepts and Cases” by Fred R. David and Forest R. David - A comprehensive guide to the principles of strategic management and analytical strategies.
Accounting Basics: “Dog” in the Boston Matrix Fundamentals Quiz
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