- Portfolio of SBUs should not have too many dogs and question marks or too few cash cows and stars.
- Each SBU should have objectives, a strategy should be formulated to achieve those objectives, and a budget should be allocated.
- SBU Strategy:
a) Hold strategy - is used for strong cash cows.
b) Build strategy - is necessary for a question mark with the potential to be a star.
c) Harvest strategy maximizes short-term net cash inflow. Harvesting means zero-budgeting R&D, reducing marketing costs, not replacing facilities, etc.
d) Divest strategy - is normally used for question marks and dogs that reduce the firm's profitability. The proceeds of sale or liquidation are then invested more favorably.
- The progression of a life cycle of a successful SBU is from question mark to star, cash cow, and dog.