Which of the following SBUs would likely be classified as a cash cow according to 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, a cash cow is characterized as a business unit with a high market share in a mature, slow-growing industry. This means the business unit generates a significant amount of cash due to its established position, even if the industry's growth is limited.

HappyTot, the children's toy company in a slow-growing industry, fits this profile well. Being in a mature market allows it to leverage its market share to maintain steady cash flow, which can then be used to support other business units or invest in growth opportunities. Cash cows typically require less investment to maintain their market position, and they provide funds for the organization's other ventures.

The other options represent different scenarios that do not align with the cash cow classification. A smartphone manufacturer in a rapidly growing sector, for instance, suggests growth potential but may require substantial investment to compete, making it more akin to a "star" or perhaps a "question mark" rather than a cash cow. Similarly, a finance company seeking market share indicates that it is in a potential growth phase, needing investment to increase its standing, while a low-market share metal manufacturer likely signifies it struggles in a competitive landscape, aligning more with being a "dog" in the BCG matrix.

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