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Direction of Arrows in the BCG Matrix

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8
Trishit Chatterjee, US

Direction of Arrows in the BCG Matrix

I wonder if the direction of the arrow between Cash Cow and Star isn't incorrect?
I think the Cash Cow (with excess dollars) should fund the star which is cash hungry (high working capital needs). So I think the arrow should flow from the cash cow to the star.
 

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6
Jaap de Jonge
Editor, Netherlands
 

Direction of Arrows is OK

The arrows are not indicating cash flows, but they represent the direction in which the company should try to move each product.
If you would like to add arrows to indicate cash flows, then there would be an arrow:
- from cash cow to star
- from cash cow to question mark
- from dog to star
- from dog to question mark.

 
2
R.C. Natarajan
Professor of Marketing, India
 

The Arrows Shown in the BCG Diagram

The arrows show how normally an SBU navigates over time. Normally, in a competitive scenario, a new sbu starts as a "?", fights and becomes a leader and hence a "star". With the plc, the market growth rate falls with saturation and hence the SBU moves to "cash cow". These arrows do not pertain to the funding direction, please note. If we talk about funding direction, your suggestions are perfectly correct.

 

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More on Strategic Portfolio Management:
Summary
Discussion Topics
topic Example BCG Matrix: Coca Cola & Pepsi Cola
topic 10% Limit in Market Growth in BCG Matrix
topic Company Strategy if Lacking Question Marks?
topic How do I Place my Products / Services in the BCG?
topic Why the Quadrants of BCG Matrix are Named as Star, Dog, Cow, Problem Child
🔥 Modified BCG Matrix 2.0
topic The BCG Matrix and Synergy Effects
topic BCG Matrix is useless!
topic BCG Matrix Star Strategies and Examples
topic Advantages and Disadvantages of Portfolio Planning Tools
topic Application of BCG Matrix in Forestry
topic Differences Between BCG Matrix and Ansoff Matrix
topic How to Calculate the Relative Market Share in BCG Matrix?
topic BCG Matrix in Emerging or Fragmented Markets
topic BCG Matrix: Can Dogs be More Lucrative than Cash Cows?
👀Direction of Arrows in the BCG Matrix
topic Distinction Between PLC and BCG Matrix?
topic Assumptions of the BCG Matrix
topic BCG Matrix Question Mark Strategies and Examples
topic The 4 BCG Categories are not Always Stages
topic Cash Cow Strategies and Examples
topic BCG Matrix for Start-ups
Special Interest Group

SIG Leader

Do you know a lot about Strategic Portfolio Management? Become our SIG Leader

Knowledge Center

Strategic Portfolio Management
Knowledge Center



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