How to evaluate costs and benefits. In the 1970’s the Boston consulting group developed a method for assessing the value of investments in the company's portfolio. The four-field Matrix distinguishes between four different types of investment.
Cash cows. Have a hot market share but a slow growth rate. This means they don't cost much but promise high returns.
Consultant's verdict milk them.
Stars have a high market share and high grot rate. But growth devours money. The hope is that the stare will turn into cash cows.
Consultants verdict invest.
Question marks ‘or' problem children have high growth potential but a low share of the market with a lot of financial support and cajolement they can be turned into stars.
Consultants verdict a tough decision.
Dogs are business units with a low share in a saturated market. Dogs should be held on to only if they have a value other than a financial one (e.g. Vanity project or favour for a friend)
Consultants verdict liquidate.
The most dangerous words in investing are 'this time it's different' Sir John Templeton.
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