Question

Brenden Corp. has five strategic business units (SBUs)—telecommunication, trucking, electronics, energy, and oil exploration. The telecommunication unit has slowed down in terms of growth and is now dominated mainly by a few large companies. Brenden Corp. has a low market share in the industry and does not generate enough revenue to even cover its costs. In the context of the BCG matrix, which of the following categories of SBUs best describes the telecommunication unit?

A) Stars
B) Cash cows
C) Question marks
D) Dogs

Answer 1

The SBU best category that best describes the telecommunication unit is: d) Dogs.

Step-by-step explanation:

To understand this answer we need to remember the categories of SBUs.

First of all, we have stars: stars are companies with high growth in high share quadrants of a market. They require a big investment and they will become heavy revenue creators.

Second, we have cash cows, this category suits perfect companies with high growth in slow-growth markets. They generate more money than they need and invest in stars to diversify their business.

Third, Question marks are slow-growth companies in high growth markets. They very often require investment from cash cows. But as they are not very good they might represent a risky investment.

Fourth, dogs. This category suits slow-growth companies with low market share. They could generate enough cash to be a sustainable business however they don't represent a good business investment, thus the money is always moved to a better investment.

Answer 2

According to the BCG matrix, the telecommunication SBU of Brenden Corp. belongs to the Dogs quadrant (Option D). This category specifically denotes low market share (Question mark and Dogs), and low, progressive lose of growth, therefore can be classified as Dogs.