Question

Hankson Corp. has five strategic business units (SBUs)—information technology, insurance, publishing, fine arts, and tourism. It invests the majority of its funds in the information technology unit as the unit has a large market share and generates large amounts of its profits in a fast-growing market. In the context of the BCG matrix, which of the following categories of SBUs best describes the information technology unit?

a. Cash cows
b. Stars
c. Question marks
d. Dogs

Answer 1

B. Stars

Step-by-step explanation:

Stars operate in high growth industries and maintain high market share. Stars are both cash generators and cash users. They are the primary units in which the company should invest its money, because stars are expected to become cash cows and generate positive cash flows.