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Sasank Pandey
Consultant, India
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BCG Matrix: Can Dogs be More Lucrative than Cash Cows?
Can someone support this statement with an example or a case study?
"Sometimes dogs can earn even more cash as cash cows".
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Jaap de Jonge
Editor, Netherlands
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Dogs Sometimes Can Earn Even More Cash as Cash Cows An example of this is perhaps IBM mainframe business. When PC's (micro) and departmental (mini)computers arrived in the 80s, everybody thought the times of the central mainframes were over (dog). However due to difficulties in large firms of replacing the unreadable, poor documented, deeply integrated and complex software on these computers, they remained a very lucrative business for IBM, even today.
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Khurram Tehseen
Pakistan
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Sometimes Dogs Can Earn Even More as Cash Cows Because if a company has spread its network and has old users, its difficult for old users to switch to another network, as Mobilink is expensive one in Pakistan, but its the oldest one is GSM technology, and Zong (China mobile) is the latest entrant, so Zong SBUs are still dogs,on the other hand Mobilink postpaid users are decreasing slowly but its postpaid is cash cow and market leader, but Zong dog products are still generating cash and even going into profit.
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Moses Nyamasoka
Strategy Consultant, Zimbabwe
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Sometimes Dogs Can Even Earn More Than Cash Cows @Khurram Tehseen: Your reaction is quite interesting. What I'd like to know is: are you talking of a dog and a cash cow within the same organisation, or are they coming from different organisations?
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Khurram Tehseen
Pakistan
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Sometimes Dogs Can Earn Even More as Cash Cows @Moses Tyamasoka: These two firms I mendtioned are two different organizations operating in the same industry.
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juhi
Student (University)
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Sometimes Dogs can be More Profitable Another way this can be the case is following simple example: an organization that has a monopoly. This could be because it is not taxed (because it is owned by the government), while the profits of other private ventures are taxed at high rate.
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Manas Mishra
Student (MBA), India
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FMCG Example Regarding Dogs Can Generate More Cash as Cash Cows Can I get another example related to this in the brown/white goods or FMCG sector? Many thanks.
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Iulian Ursache
Management Consultant, Canada
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Dogs as Cash Cows? The difference between the Dog and Cash Cow product categorization is the market share percentage considered as a threshold between these two quadrants.
Comparing apples to apples, I assume that we can reformulate the original question of this thread as:
- Given a product with a low market share in a slow growing market, would be better to take actions that are usually set by the organization for Cash Cows instead the ones for Dogs?
- Or would the EBITDA for the product, after reducing some of the marketing and R&D costs, be relevant enough for retaining the product and use it for supporting Stars and Question Marks?
This can definitely be advisable. As I mentioned in another message I've posted (The Cash Cow Mistake in BCG Analysis), product market strategists should not rush to take the actions found everywhere on the internet for describing the BCG Matrix.
Moreover, we should also consider that one could take a product that has a small market share and support it financially and logistically to increase its market share, given that the competitors might fall for the Cash Cow mistakes that I've mentioned.
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ISAAC E. OGBUKA PhD
Nigeria
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Don't Liquidate Dogs in All Cases The BCG Matrix does not consider the place of traditional/generic products that companies maintain in their product lines that may have had high market share and market growth in time past, but currently do not. Sometimes, companies can and should keep the dogs (low growth, low market share) due to some intangible factors.
What needs to be done may not necessarily be to let go, but to invest more in such products in repackaging (innovation). This is because market expansion is a dynamic process that responds to identified opportunities and there are other basic factors that influence investment decisions and market expansion. The cost element is for instance an essential determinant.
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