Explain the strategic implications of each of the following types of business in a corporate portfolio: (a) Stars (b) Question Marks (c) Cash Cows…

In the BCG growth-share matrix portfolio of investments are represented in two-dimensional space. The vertical axis represents market growth rate, and the horizontal axis represents relative market share. The strategic implications for various business types under BCG in the corporate portfolio are: Stars are products or businesses that are growing rapidly and are the best opportunity for expansion. Stars may follow the Build strategy. They need heavy investments to maintain their position and finance their rapid growth potential. Cash Cows are low-growth, high market share businesses or products. They generate cash and have low costs. They are established, successful, and need less investment to maintain their market share. A strategic alternative advocated for cash cows is Harvest. Question Marks are low market share businesses in high-growth markets. A strategic option for them is Hold for which they need heavy investments. Question marks if left unattended are capable of becoming cash traps. Dogs are low-growth, low-share businesses and products. The relevant strategy is Divest. Dogs may generate enough cash to maintain themselves, but do not have much future. Dogs should be minimized by means of divestment or liquidation. OR Strategic alliances are formed if they provide an advantage to all the parties in the alliance. These advantages can be broadly categorised as follows: (i) Organizational: Strategic alliances may be formed to learn necessary skills and obtain certain capabilities from the strategic partner. Strategic partners may also help to enhance productive capacity, provide a distribution system, or extend supply chain. A strategic partner provides a good or service that complements each other, thereby creating a synergy. If one partner is relatively new or untried in a certain industry, having a strategic partner who is well-known and respected will help add legitimacy and creditability to the venture. (ii) Economic: Alliances can reduce costs and risks by distributing them across the members of the alliance. Partners can obtain greater economies of scale in an alliance, as production volume increases, causing the cost per unit to decline. Finally, partners can take advantage of co-specialization, where specializations are bundled together, creating additional value. (iii) Strategic: Organizations may join to cooperate instead of competing. Alliances may also create vertical integration where partners are part of the supply chain. Strategic alliances may also be useful to create a competitive advantage by the pooling of resources and skills. This may also help with future business opportunities and the development of new products and technologies. Strategic alliances may also be used to get access to new technologies or to pursue joint research and development. (iv) Political: Sometimes there is need to form a strategic alliance with a local foreign business to gain entry into a foreign market either because of local prejudices or legal barriers to entry. Forming strategic alliances with politically influential partners may also help improve overall influence and position.