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Cash Cow

  • What is Cash Cow? Describe.
  • What is the meaning of Cash Cow?
  • Cash Cow Product Examples

What is Cash Cow? Describe.

A Cash Cow is a profitable venture or business that has acquired most of the mainstream market share with little speculation at the start of it. This term “Cash Cow” also refers to one out of four essential aspirants of a planning tool, a cutting-edge portfolio management framework, first infused in the early 1970s by the BCG, a management consultancy based in Boston, America. It is also known as BCG Matrix in public.  

A Cash Cow is a popular buzzword in the business community used for a business venture or product that consistently generates high revenue for the business. Many enterprises or business owners wish to acquire such a money-making venture by owning some stake in it so that the Cash Cow Company comes out as a savage for their other business units that are not earning well and need cash to survive in the market.  

What is the meaning of Cash Cow?

As the word suggests, it is a metaphor utilized for a constant income source or steady revenue-generating company. Business owners willingly want to buy such Cash Cow Companies so that they can generate the most value returns from their other baby ventures. Investors or shareholders finance their not-performing (baby venture) with the help of the amount of money earned from the Cash Cow Company. It can also be used for research and development or to reduce the overall debt burden on the company. The company can also use the cash to pay dividends or to buy back shares.

A company does not have to invest much in the business apart from the initial investment, and once the company recovers its initial outlay, it does not require more money to keep the business chunk rotating.

Cash Cow Product Examples

A Cash Cow Company offers steady growth to its shareholders with a low maintenance cost. The iPhone is the best example of a Cash Cow Product. It offers great support to the American company- Apple Inc, located in California. Another biggest example of a cash cow is Alphabet’s (Google) search engine, Kleenex tissues.All these products have a large market share in a slow growth-rate industry and as a result, these products require little investment while generating a constant income source.