Henderson identifies four types of business strategies, each with its own strengths and weaknesses:
: High growth, low share; potential to become stars but require heavy investment. the logic of business strategy bruce henderson pdf
A balanced portfolio requires that the Cash Cows fund the Stars and selected Question Marks. If you starve a Star, it becomes a Dog. If you milk a Cash Cow too hard, it dies. Henderson identifies four types of business strategies, each
This is perhaps Henderson's most famous contribution. He observed that as a company produces more of a product, its costs decline at a predictable rate. The logic is simple: greater cumulative experience equals lower costs, which allows for competitive pricing or higher margins. If you milk a Cash Cow too hard, it dies
Bruce Henderson, founder of the Boston Consulting Group, established modern business strategy as a logical system rooted in experience curves, portfolio management, and competitive natural selection. His framework emphasizes gaining market share to achieve cost leadership, allocating resources to "stars" and "cash cows," and dominating market niches to survive against competitors. Learn more about the history of strategy at BCG .
Dogs have low market share in mature industries. They rarely generate significant cash and often trap corporate capital that could be used more productively elsewhere. Henderson generally advised divesting or liquidating these units. 4. The Logic of Resource Allocation
High growth, low share (requires investment). Dogs: Low growth, low share (should be divested). C. Cost Leadership vs. Differentiation