If an SBU holds a majority of the market share in a rapidly growing industry, how is it categorized in the BCG matrix?

Prepare for the Management and Organization Module 6 (06-MGMT-ORG) – Strategy Exam. Engage with flashcards, multiple choice questions, hints, and explanations. Excel in your exam!

In the context of the BCG matrix, an SBU (Strategic Business Unit) that holds a majority of the market share in a rapidly growing industry is categorized as a "Stars." This classification is based on two key dimensions of the matrix: market growth rate and relative market share.

Stars are characterized by high market share in fast-growing markets. This positioning indicates that the SBU is not only a leader in its market but is also operating in an industry that is expanding significantly. As a result, Stars have the potential to generate substantial revenue and profits which can be reinvested into the business to sustain their growth or into new initiatives.

The rapid growth of the industry coupled with the SBU's strong position allows it to capitalize on increased demand and maintain or grow its market share further. Generally, these units may require significant investment to support their growth, but they also promise high returns, making them a crucial part of a company's portfolio. Understanding this positioning helps companies prioritize resources effectively to maximize overall business performance.

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