In the portfolio matrix, what is a business unit that shows rapid growth but poor profit margins referred to?

In the portfolio matrix, what is a business unit that shows rapid growth but poor profit margins referred to?

• A. Star
• B. Cash Cow
• C. Problem Child
• D. Dog

Answer: (C)

In the portfolio matrix, a business unit characterized by rapid growth but poor profit margins is indeed referred to as a Problem Child, also known as a Question Mark. This designation indicates that while the business unit is in a market with high growth potential, it has not yet achieved a strong market share, which results in low profitability. The classification of Problem Child suggests that the unit has potential but requires significant investment to develop further and improve its profitability. This contrasts with other categories: Stars, which have both high growth and market share; Cash Cows, which have high market share but low growth; and Dogs, which have low growth and low market share. Understanding these distinctions is critical for assessing where to allocate resources and how to formulate strategies to improve performance within a business portfolio.

In the portfolio matrix, a business unit characterized by rapid growth but poor profit margins is indeed referred to as a Problem Child, also known as a Question Mark. This designation indicates that while the business unit is in a market with high growth potential, it has not yet achieved a strong market share, which results in low profitability.

The classification of Problem Child suggests that the unit has potential but requires significant investment to develop further and improve its profitability. This contrasts with other categories: Stars, which have both high growth and market share; Cash Cows, which have high market share but low growth; and Dogs, which have low growth and low market share. Understanding these distinctions is critical for assessing where to allocate resources and how to formulate strategies to improve performance within a business portfolio.